Porter Five Forces Model Essay

Words: 1242
Pages: 5
Open Document
Porter's 5 forces model is a powerful way of analysing the competitive forces that shapes every industry in general. This was developed by Michael E. Porter of Havard Business School in 1979. This tool helps you to identify whether a new product, investment, services or business have the potential to be profitable.

The 5 competative forces that are taken into consideration are:
Competition in the Industry
Potential of new entrant into Industry
Power of Suppliers
Power of Customers
Threat to substitute products

Lets discuss each of these points in detail:

Competition in the Industry:

This describes the competition between the existing firms in an industry. Greater the competitive riverly (companies providing equally good …show more content…
Also the telecom sector, first to make an entry you need TRAI's approval and licensing also you have to compete for the finite radio spectrum available.

Patents: Ideas and Knowledge that provides competitive advantage over others when patented, preventing others from using it and thus creates barrier to entry. Pharma and Software sectors sees maximum number of patents being filed making it difficult for new firms to replicate their products.

High Entry Cost: If the initial cost to set up a new firm is difficult, then the chances of new entrants are very less. Once again coming back to oil sector, Exploration and Production of oil and gas involves a highly capital and technology intensive process of finding oil reserves, assessing its feasibility, drilling and extracting.Hence creating a very high entry cost

Existing loyalty to major brands: If the existing brands are very well-established, then chances of a new firm giving them competition is minimal. Pepsi and Coca Cola dominate the soft drinks industry worldwide making it difficult for any new entrant to survive in front of them.

On the other hand, if the industry uses common technology, there is little or no brand franchise and if the entry cost is low then it is very easy for a new entrant to enter into the industry.

Power of Suppliers:

A company to manufacture its products requires raw material, labor etc.This creats a buyer-supplier relationship in an
Show More

Related Documents: Porter Five Forces Model Essay

Porter's Five Forces

Porter’s Five-Forces form of aggressive analysis is a broadly utilized move toward rising strategies in many businesses. To him, the environment of competitiveness in a given business can be analyzed as a combination of five forces: Rivalry among competing firms, possible admission of new competitors, and possible expansion of substitute products, negotiating power of suppliers and negotiating effort of consumers. (www.mba-tutorials.com.),(http/www.mba-tutorials.com/strategy/65-porter…). (https://www…

Words 767 - Pages 4

Strategic Management and Bargaining Power Essay

Porter's Five Forces Model Accordingly to Maxi-Pedia they claim, Michael Porter discuss how the “Porter's five forces model”, influenced the businesses framework and industry (“Maxi-Pedia”, 2012, p. 1). These five forces are used for business strategy tools for business looking for the edge the system can help with, information needed to grow into a better E-Business. E-Business companies can use these points to create their plans, investment and future strategy. (1) Risk of new entry by…

Words 352 - Pages 2

Analysing Mcdonalds (Fast Food Outlets) Using the Porters 5 Forces Model – Sometimes Called the Competitive Forces Model. Essay

using the Porters 5 forces model to asses its competitive position in the fast food industry. As the name suggests the Porters 5 Forces model focuses on 5 key…

Words 1007 - Pages 5

Porter's Five Forces

Apple & Porter’s Five Forces Intro: Apple is a company that manufactures, designs and markets media and mobile communication devices including portable digital music players, personal computers and a huge range of related software, peripherals, services, networking solutions, applications and third-party digital contents. Apple Company’s products include iPad, iphone, Macbook, Apple TV, a wide selection of both professional and home use software applications, IOS & OS X operating system and also…

Words 2422 - Pages 10

Managerial Assignment Essay

Porter’s model of competitive forces in an industry is an extension on Structure-Conduct-Performance model (SCP). SCP involves features, such as structure of industries (degree of concentration, market share distribution), conduct of firms (price setting, advertisement techniques, technology) and performance of firms/industries, (profitability related to the extent of market power) Porter’s model assumes that there are five strengths of rivalry that classify the competitive dominance in an industry…

Words 1674 - Pages 7

Strategic Clock Speed Essay

organizations to merely continue `business as usual`. This new era requires organizations to reevaluate the impact of social trends and the effect on their business (such as CSR practices), their industry forces, and their strategic imperatives, all the while looking for innovation and change (Porter, 2006). How a firm manages these factors will determine any future successes, and can even keep the firm alive. But at the same time this new technology can only help us in the “creation of true economic…

Words 1408 - Pages 6

Essay Strategic Management and Competitive Forces

ARTICLE REVIEW FORM NAME: Alison Benton DATE: 1/27/2015 ARTICLE TITLE: The Five Competitive Forces That Shape Strategy STATE THE MAIN IDEA (CONTRIBUTION) OF THIS ARTICLE TO THE FIELD OF STRATEGIC MANAGEMENT: Michael E. Porter writes about five forces that help strategic management better understand the idea of industry competition. The article explains the different impacts that threats of new entrants, threats of substitutes, rivalry among existing competitors…

Words 919 - Pages 4

Porter's Five Forces And Norton's Balanced Scorecard

profitable as an essential goal for all industries. Organizations are challenged by identifying the benefits and limitations of Porter's Five Forces and Kaplan's and Norton's Balanced Scorecard. These powerful strategic management tools can be linked to interact with each other. Porter's work can facilitate…

Words 1312 - Pages 6

Advertising Industry Analysis

STRATEGIC MANAGEMENT 1. INTRODUCTION Environmental Analysis – “Global Forces and the Advertising Industry” is a study which indicates of effect of advertising industry on the environment towards development of the any company or product of a company. This study is evaluated using PESTEL and Porter Model for Five Competitive Forces which are considered as effective tools of environment analysis. 1.1 PESTEL A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental…

Words 1127 - Pages 5

EA 1995 Essay

are bounded by the firm’s culture, norms, and value. (3) Do an industry analysis of the hardware for the gaming industry using the Porter Five forces model. Has the overall structure of the industry changed? Explain. An industry analysis of the hardware for the gaming industry using the Porter Five forces model. a) Industry Rivalry. By the end of 1994, at least five companies had announced that they would launch 32-bit or 64-bit video game platforms in the US: 3DO, Atari, Sega, Nintendo and Sony…

Words 467 - Pages 2