The most critical factors affecting an organization’s ability to compete are the bargaining power of buyers and suppliers (C) and the threat level of substitute products and new market entrants (E). These elements are core components of competitive forces analysis, commonly associated with strategic frameworks used at the SPHR level.
The bargaining power of buyers and suppliers directly influences pricing flexibility, profit margins, and supply chain stability. When buyers have strong bargaining power, they can demand lower prices or higher quality. When suppliers dominate, costs increase and operational flexibility decreases—both directly affecting competitiveness.
The threat of substitute products and new entrants shapes market dynamics by increasing competition, driving innovation pressure, and limiting long-term pricing power. Organizations in markets with low barriers to entry or many substitutes must continuously adapt to remain competitive.
Automation (A) and total quality management proficiency (D) are internal capabilities that support competitiveness but do not define the competitive environment itself. Marketing media cost (B) is a tactical expense rather than a strategic competitive force.
SPHR exam content emphasizes that HR leaders must understand external competitive forces to align workforce strategy, capability development, and organizational design with business realities.
References :
HRCI SPHR Exam Content Outline — Functional Area: Leadership and Strategy (competitive analysis; external environment).
HRCI SPHR Study Guide — Competitive forces and strategic positioning.
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