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To start today's blog, what do you think about competition?
Some believe it is a force for good. Some believe it is a force for conflict. We believe it is a force for good. Share your answer to this question in the comment section below.
In the world of commerce especially, we see competition as a positive force because it serves to drive prices down and requires that businesses innovate their products and services to keep the consumer engaged.
There are various models of how to devise a business strategy to address the forces of competition. In today's blog, we will discuss Michael E. Porter's framework of how to devise a business strategy and will apply his model to nonprofit organizations, our specialty.
Do nonprofits need to develop a business strategy?
Yes. Why? Because donors and grantors have a seemingly unlimited number of nonprofit organizations to choose from, including those offering your specific product or service. Whether your nonprofit is selected as an organization that they want to donate to has to do with understanding what sets you apart from others and using a framework like Mr. Porter has developed can help you strategize how to meet financial goals in the short run and long run to stay relevant to donors and grantors and meet their expectations.
Who is Michael E. Porter and what is his business strategy model?
An introduction. Michael E. Porter is a University Professor at Harvard, based at Harvard Business School in Boston. His model is respected in the business field and used by countless managers and leaders across industries.
His model is called: The Five Competitive Forces That Shape Industry Competition. In the article that highlights the value of this model (a book was also written to explain the framework in more detail), Mr. Porter says, "[This framework] drives competition and profitability, not whether an industry produces a product or service, is emerging or mature, high tech or low tech, regulated or unregulated". Mr. Porter postulates that any industry, for-profit or nonprofit, is driven and affected by this particular set of forces of competition: