This topic of block 3 of B713 touches on how strategy can be put together based on the understanding of the forces in the market. This is the case if an organisation intends to venture into a new market segment or region. There are two key theories relevant to this; the Porter (1980) market five forces and an extension of it by David McKevitt (2000) that takes a slightly extended view on public organisations, in particular those that have direct interaction / interfaces with the people.
Porter theory is most relevant in the context of free market. Understanding the forces - existing competitors, (bargaining power of) suppliers, (bargaining power of) customers, (level of) barrier of entry, and (potential) new entrants provide - allows an organisation to come up with the right strategy. For example, in a market that is highly driven by brands, it is important that the right level of investment is allocated to introduce a new brand.
In this topic of market based strategy approach, what is most key is that how an organisation is adapts to the changes in the market and alter and align its strategy accordingly. What is more important is its sensitivity to indicators of these changes to react early enough.
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