Week 6 Reading Reflection

In this weeks reading reflection, we were assigned to read an article in the Harvard Business Journal. I had to access the UF Library which has many sources to other articles and journals on the site.

1. The most surprising line I read in this article is "Powerful customers- flip side of powerful suppliers - can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability". This was surprising due to the bluntness from the author. As a regular consumer, you would not think the customer had that much power over how a business changes their goals and plans. I always thought the business accomplishes what they want to do according to their own rules, not act like a public servant.

2. The most confusing part of the reading for me was trying to understand the paragraph of price sensitivity with buyer groups. "The product it purchases from the industry represents a significant fraction of its cost structure". I understand that customers will bargain for the lower costs, but I still do not get how this relates to the price being categorized as sensitive. Sensitive to the customer finding bargain deals or that the price changes easily when customers do not but it at its "set" price?

3. The first question I would ask the author of the journal is what does he think the number one drive of competition is for an industry, besides the industry structure. The reason for this is his statement of the industry structure is too vague. The second question I would address him with is why does he think security brokers and dealers are the most profitable U.S. industries? I know my own answer, I would just like to compare it against his. The brokers and dealers of the country really do handle the direction of where the economy is driven towards: positive or negative.

4. In the article, the author states that the five forces differ by industry, and to a certain extent I want to argue this. I feel that every industry ever discovered or ran in this country has one goal: making profit. With that being said, I feel that all of the five forces defined in this journal all are comparable to each industry ran in America. So, I do not think they differ by industry, just different goals would make the forces different.