Business Quality Monitoring
The quality of the business and the level of potential success or failure of a company, determined by the structural analysis of the industry, in order to qualify the business on a scale whose endpoints are defined by bad business and good business. PORTER(1991), identified five determining forces, whose performance, together, results in the same basis for the level of profitability (low, high) of companies in the business. An ideal business is one that presents:
1-High barriers to entry.
2-No exit barriers.
3-Small degree of rivalry.
4-Lack of substitute products.
5- Greater bargaining power with customers and suppliers.
It is important to check the quality of the business, as PORTER said, he named it STRUCTURAL ANALYSIS OF INDUSTRY. This analysis is a procedure designed to diagnose the quality of a business, based on five determining forces that measure the success and failure components of a company's business and its competitors.
The benefits of the analysis are knowing what are the components of success and failure of a company's business and for all competitors, in order to carefully carry out a structural analysis of the business, the components of each of the five must be analyzed. forces of business success.
The information system, to enable the environmental analysis regarding the quality of the business, must provide a set of information that can be structured around each of the five strengths pointed out by PORTER.
The business concept is closely related to the industry in which such a business is located. A good business enables all companies that are successful, there is a certain tendency for all companies in a business to have the same level of success .
Beer companies in a country, fast food franchises, all book publishers, etc... have similar profitability to each other, which indicates that there are determinants for the success of a business that are common to all companies in the business. or industrial branch. They simultaneously affect all companies in the same business, but only point out the numerous indicators relevant to it and that the information system must continuously provide the best quality of the business, in which the company operates or in which segments it wants enter. They are:
1-Barriers (entry-exit).
2-Degree of rivalry.
3-Substitute Products.
4-Power of negotiation (with customers and suppliers).
1-BARRIERS.
Barriers are the difficulties that any company encounters to enter or exit a certain industry, the existence of barriers to entry makes it difficult for new competitors to appear to divide the market, and, therefore, makes the business good. Exit barriers, especially in times of crisis, facilitate the closure of companies, leaving the remaining ones with the largest share of the market. The closing of a competitor facilitates the survival and success of companies that resisted the difficulties of the market.
IMPORTANCE OF BARRIERS.
Entry barriers have an alternative importance in relation to exit barriers, as the former are more important in a growing market and the latter are decisive in a market in crisis.
Entry Barriers: These are the difficulties for companies to enter a certain industry, they are as follows.
1-Minimum size of the project.
2-Technological Sophistication.
3-Brand Identity.
4-Reputation of the Company.
5-Complexity of distribution.
6-Sources of Inputs.
7-Government Rules.
8-Expected Retaliation.
9-Difficulties for customers to change supplier.
EXIT BARRIERS.
These are the difficulties for closing the company in a certain industry, such as:
1-Number of competitors in the market.
2-Recovery of investments.
3- Closing expenses.
4-Legal and social restrictions.
5-Strategic interrelationships.
6-Emotional barriers.
7-Alternatives for other businesses.
RIVALRY
It is more difficult to succeed when competitors compete inch by inch for position in the current and future market. The degree of rivalry is determined mainly by the characteristics of the industry and to a lesser degree by the personality of its executives. personal factors of the executives who command organizations in a broad way.
IMPERSONAL FACTORS.
1-COMPETERS ALL BALANCED.
2-BUSINESS GROWTH RATE.
3-RELATIVE FIXED COSTS.
4-CHRONIC INSTALLED CAPACITY FOR THE MARKET.
5-PRODUCT OR BRAND DIFFERENTIATION.
6-MODULE OF INCREASE CAPACITY.