Dawari Akobo DP17MBA0967
The Competitive structure of an organization is a very important business environment. Identification of forces affecting the competitive dynamics of an organization will be very useful in formulating strategies. According to Michael Porter’s well known model of structural analysis of organisation, the state of competition in an organisation depends on some basic competitive forces. The following are Government policy, economies of Scale, cost disadvantages independent of scale, product differentiation, monopoly elements, and capital requirements
From the above it can be deduced that from a business competitive environment perspective that though the Corporate Affairs Commission gesture of reducing business registration by the Federal government directives might be beneficial to new business entrants, the theory of competitive environment especially that of porter suggest that new entrance is a threat to the state of an organization, although a good Government policy for entry barrier which could create economies of scale with its negative consequences like keeping out smaller players. Also it should be noted that there is the cost barrier to these new entrants different from existing firms. Furthermore new entries will be challenged to overcome product differentiation in terms of image, customer loyalty, product attributes. There are also the tendencies of monopoly elements for distributional channels. Finally, high capital requirement is also a barrier to new entrants, with risk of huge investment which is a discouragement to other fames.
Secondly, rivalry of competitors is a major challenge for the Federal Government – Corporate Affairs Corporation business registration reduction policy. The intensity of rivalry are affected by the followings: number of firms and their relative market share and strengths, hence more firms more rivalry, state of growth of the industry: a firm is required to increase market share at the detriment of other firms in a declining or slow growth industry, fixed or storage cost: high storage cost causes firms to reduce capacity storage, strategic stake: firms become volatile when there exist a number of firms with high stake, exit barrier: Firms keep operating in a redundant industry despite decline due to labor compensation and emotional attachment. Rivalry becomes more complex and expected retaliation from potential entrants may also sometimes deter entry.
Thirdly, substitutes might be another threat to the Nigerian business environment with the CAC registration reduction policy. The return in an industry is limited by substitutes. Attractive price deters major profits. Firms are challenged with firms producing close or distance substitutes.
Fourthly the bargaining power of buyers is notably a hindrance because in many industries buyers are potential competitors who may integrate negatively. Buyers compete with industry forcing down prices, opting for more service and better quality, playing completion against one another. So we see that even the new entrants to the N5000 CAC offer can and will attempt via competition to force down price and instigate for more quality with an unproductive price.
Lastly the bargaining power of suppliers is significant in the competitive environment of business. Porter’s analysis, thus, shows that competition in an industry goes well beyond the established players. “Knowledge of these underlying sources of competitive pressure highlights the critical strengths and weaknesses of the company, animates its positioning in its industry, clarifies the areas where strategic changes may yield the greatest payoff, and highlights the areas where industry trends promise to hold the greatest significance as either opportunities or threats.
So, although the Federal Government of Nigeria business registration reduction policy are perceived to be positive, it might be also adequate to consider porters analysis in competitive environment to determine the overall effect of the Federal Government of Nigeria gesture in reducing business registration through the corporate affairs commission and its effect on the Nigerian business environment.
Dawari Akobo DP17MBA0967