Strategic Positioning Within An Industry example essay topic

My thoughts on strategic thinking at Haemonetics was based upon my review of an article by Michael E. Porter from Inc. Magazine online. It was written in September of 1991 and titled "Know you Place, Assessing the attractiveness of your industry and strategically positioning your company". Michael E. Porter, a Harvard Business School Professor, is a leading authority on competitive strategy and has authored 16 books and over 100 articles on the subject. He is such a leading authority that Harvard University created the Institute for Strategy and Competitiveness to further his work and his ideas are taught in virtually every business school in the world. His article, Know Your Place, discussed several key points that every business must know to be competitive and survive.

His points focused around analyzing your industry and strategic positioning within that industry. Analyzing your industry is the process of understanding the attractiveness of the industry in regards to long term profitability. To understand how to access attractiveness Michael outlines five basic competitive forces that fit all industries. They are the character of the competition, threat of new competition, threat of substitute products and the bargaining power of suppliers and buyers. Each of these needs to be understood because the potential profit in any industry is determined by the balance of these forces. Haemonetics industry is unlike a typical manufacturing industry because of the medical device regulatory implications.

We sell to blood banks and hospitals but in the end the true requirement we strive to meet is that of the volunteer donor. Haemonetics and our competitors do enjoy a rather calm industry and that there is not a lot of cost cutting going on. These factors, according to Michael, help the industry retain it's attractive nns for profit potential. Our industry has involved the same players over the years because there are effective barriers to entry for new competition. As a medical device manufacturer there are regulations and business practices that make it hard for new entrants to join. Because our devices are classified as medical devices there are no cheap substitutes available so our customers do not have many options available to them.

Because we do sell to hospitals and agencies such as the American Red Cross we are limited in our ability to raise prices. The hospitals and blood centers have combined forces over the years in regards to procuring products so we are under some pressure to keep prices in check. The power of the customers has resulted in a push to provide higher levels of customer service and free services in some instance to keep them happy. Haemonetics has taken some steps to protect it's share of the industry by trying to influence how the industry works. According to Michael Porter, if you think strategically, you can influence the structure of your industry in a positive way. Haemonetics has tried to strengthen their relationships with key customers by allowing them to order directly on-line.

As well as providing complimentary services such as software to automate their data collection processes which saves them time and money. By working to become a full service provider of all related items, Haemonetics is reshaping how hospitals and blood center typically do business and in the process, adding value. Industry shaping, as discussed by (Courtney, 1997) in the article Strategy under Uncertainty, is a popular business tactic but not usually pulled off because the company lacks the resources or power within the industry. Haemonetics may fall into this category.

Although the industry leader in several areas, we are not the largest or strongest financially and our major competitor has forced us to react to their moves rather them to ours. Strategic positioning within an industry is the process of knowing what advantage you have over your competitors and narrowing the scope of your market enough to take full advantage. Michael Porter explains that competitive advantage comes in either the form of price or service. You can provide the same exact product as someone else however if you sell it cheaper you have an advantage. On the service side, you may provide a more expensive product than your competitor because you also prove more value, as perceived by the customer.

This value is worth a premium to them and you again, have an advantage. Haemonetics recently took a close look at the scope of their current market target and has announced plans to make significant changes. Presently we are a four business unit company primarily focused on the four different components of blood and the markets involved. An announcement to investors last week highlighted a change to two business groups, tightly focused on the donor and patient, regardless of blood component. This refocus has narrowed the scope and all efforts will be dedicated to those two areas. Management feedback has been we are possibly spreading our selves too thin and losing the competitive advantage we had.

As discussed in the selected reading article "What is Strategy?" , (Porter, 1996) competitive strategy involves performing different actions than your competitor, enough so customers feel they are receiving a unique mix of value for their money. Management is responsible to filter the strategy down to everyone so their day to day actions reinforce the strategy. If done correctly it will become a powerful competitive tool.

Bibliography

Porter, Michael E. (1991) Inc.
com. Know Your Place, Assessing the attractiveness of your industry and strategically positioning your company. Retrieved July 26, 2003 from the World Wide Web: web.