Porter 5 Forces

301 Words2 Pages
My analysis of the Five Competitive Forces that shape strategy by: Michael Porter Porter's Five Forces Model is basically a framework for Industry Analysis, and is just one part of the complete Porter's Strategic Models. The other elements are the Value Chain and the Generic Strategies. The Five Forces Model helps in business strategy development. It was presented by Michael Porter. According to this framework, there are 5 forces that determine the Competitiveness of a market and its Attractiveness and Profitability. These forces are derived from: (1) external sources of competition which are: threat of substitute products, threat of new entrants, and competitive rivalry within an industry (horizontal); (2) internal source of threats: bargaining power of buyers, bargaining power of sellers (vertical). Industry Analysis: The industry analysis can be used in several ways to guide your strategic decisions. Benefit from industry analysis by: Understanding the competitive forces in your industry. Assessing the attractiveness of, and growth opportunities within, a new industry. Developing effective strategies to raise your profitability, power, and competitive position in an industry. Competitiveness: This pertains to the ability and performance of a firm, sub-sector or country to sell and supply goods and services in a given market, in relation to the ability and performance of other firms, sub-sectors or countries in the same market. The term may also be applied to markets, where it is used to refer to the extent to which the market structure may be regarded as perfectly competitive. Attractiveness & Profitability: Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one
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