• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10

Porters Five Forces

Extracts from this document...


´╗┐Porters Five Forces What Works for Management Competing in Your Industry By Jain Subnash, Understanding the Phantom Competitors in Your Industry. Many business owners fear the global economy and labor market, but is that the only danger on your horizon? There are other forces (phantom competitors) that can impact your long-term success and this information will help you to discover them for your industry. This is a summary of what Michael Porter, a professor at Harvard Business School, calls Industry Attractiveness, or the Five Forces Model. I will attempt to present his model in a way that can be easily understood and applied to your specific business situation. I hope you find this helpful to identify and compete with the ?Phantoms? that threaten your business. One of the biggest mistakes made by smaller, entrepreneurial businesses is to assume they do not need to think about strategy. All businesses should be concerned about strategy and how to position themselves in their competitive environment. Whether you?re starting a business or trying to compete in an existing business, the first issue to address is the attractiveness of your industry. Analyzing your industry attractiveness (IA) will help you decide if you should get into a new industry, get out of the one you?re in or redefine it. ...read more.


If you?re selling to Wal-Mart, or other big box retailers, you are at the mercy of their pricing, inventory maintenance, returns, and in-store advertising policies. If you are selling a unique product or service into an underserved market you have greater flexibility and a more attractive industry. I recommend: You can evaluate the Buyers' Bargaining Power in your industry by answering the following questions. (Strong affirmative answers indicate minimal bargaining power, which is good for you) - Is the cost of your product/service insignificant when compared to your prospects financial resource? - Are prospects unfamiliar with your industry and product/service? - Do you sell a lot of one product or vs. one sale that sustains your company? - Is it difficult and expensive for prospects to shop-around for other products/services like yours? - Is it expensive/difficult for customers to switch away from your product/service? - Can you easily differentiate yourself from the competition? Market Forces are also determined by the bargaining power of buyers. Read more Description of the Model This industry model was initially described by Michael Porter in his book, Competitive Strategy. It addresses the key factors that influence industry profitability. The ideal position would be the outer edge of each axis. Any point on the scale where your enterprise ranks higher than all competitors represents a market opportunity. ...read more.


Consider the following strategies: defend strengths shift resources to attractive segments examine ways to revitalize the industry time your exit by monitoring for harvest or divestment timing Low Attractiveness Average Competitive Position The strategy advice for this cell is to restructure, harvest or divest. Consider the following strategies: make only essential commitments prepare to divest shift resources to a more attractive segment Low Attractiveness Weak Competitive Position The advice for this cell is to harvest or divest. You should exit the market or prune the product line. Description of the Model This chart portrays the interaction between three of the five forces from the Industry Attractiveness chart. If the prospect is in a position to dictate the terms under which they purchase your product or service and there is also a high probability of new competition or substitute products then it will be difficult to be profitable. As either or both of these forces is weakened, your potential for profitability increases. Characterize Your Enterprise The expert system will position your enterprise on the chart based upon your description of: switching costs economies of scale barriers to entry distribution channels differentiation You can trace through the supporting analysis and its conclusions, adjusting your input until you are satisfied your description accurately characterizes your enterprise. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    International Business Strategy - Case Study on Unilever

    4 star(s)

    According to the globalisation theory, basic commodities have a global market and that products are differentiated due to cultural and legal differences among countries. The theory goes on to the differences in cultural and economic institutions do exist and fragmentations are resulted.

  2. Why has GDP growth been so slow in Somalia?

    Blackwell Publishing. 14 Giles Bolton (2007). Poor Story. Edbury Publishing. 15 Giles Bolton (2007). Poor Story. Edbury Publishing 16 World Bank. (2009). Country Brief. Available: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/SOMALIAEXTN/0,,menuPK:367675~pagePK:141132~piPK:141107~theSitePK:367665,00.html 17 United Nations Development Programme. (2011). Somalia. Available: http://hdrstats.undp.org/en/countries/profiles/SOM.html 18 RAND. (1993). How do education and training effect a countries economic performance?.

  1. Globalisation of Wal Mart

    Walmart started making revenues of $12.6 million (1967) this has now reached $191 billion (see appendix item 6). From 1967 to present, the amount of stores under Walmart has increased from 24 up to more than 4,600. Wal-Mart has taken over some businesses that are successful within their own markets e.g.

  2. In what ways is the government attempting to increase the willingness to wor

    This has in turn increased willingness to work as unemployment benefits have been cut and the labour market has become more competitive. Social Benefits In recent years the government has altered the benefit system. One being a reduction in the value of unemployment benefits compared with average wages of people to work.

  1. comparative HR Management

    This term is understood as influence not only through usual tools of management used in the democratic countries, but also appreciably through absolute dependence colonies as a whole from metropoles and native workers from the foreign owners of the enterprise and foreign managers, employed by them.

  2. Analyse the Strengths and Weaknesses of Spain by 1516

    with them increased (Toledo for instance enjoyed a long period of peace largely due to Gomez Manrique, its Corregidore.).

  1. International Management

    Some countries will be winning a lot while other will be loosing, as a WTO member, China's exports and imports would grow at higher rates than if it were not a member. The entry of China direct consequence is the entry of Taiwan and Hong Kong into the WTO; their

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    Activity on the regional track has accelerated since the failure of the WTO's Seattle Ministerial Conference in 1999, especially in Asia-Pacific, starting with Singapore and involving Japan, South Korea, Australia, New Zealand, Mexico, Chile, the US, Canada, and now China and Hong Kong.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work