|
 The Five Forces model
of Porter is an outside-in business unit strategy tool that is used to
make an analysis of the attractiveness (value...) of an industry
structure. The Competitive Forces analysis is made by the
identification of 5 fundamental competitive forces:
o the entry of
competitors (how easy or difficult is it for new entrants to start to
compete, which barriers do exist)
o the threat of substitutes (how easy can our product or service be
substituted, especially cheaper)
o the bargaining power of buyers (how strong is the position of
buyers, can they work together to order large volumes)
o the bargaining power of suppliers (how strong is the position of
sellers, are there many or only few potential suppliers, is there a
monopoly)
o the rivalry among the existing players (is there a strong
competition between the existing players, is one player very dominant or
all all equal in strength/size)
o as a sixth
factor could be added: government.
Porter's
competitive forces model is probably one of the most often used
business strategy tools and has proven its usefulness on numerous
occasions. Porter's
model
is particularly strong in
thinking outside-in. Care should therefore be taken not to underestimate
or underemphasize the importance of the (existing) strengths of the
organization (inside-out) when applying this
five competitive forces framework of Porter.
From a Value Based
Management point of view, the Five Forces model (Market/Industry
Attractiveness) of Porter can be seen as one of two dimensions in
maximizing corporate value creation. The other value creation dimension is
how well a company performs relatively towards its competitors (Relative
Competitive Position), for which two other Porter-models are
frequently used: the Value
Chain framework and Porter's
Competitive Advantage.
See also:
Porter Competitive
Advantage |
Four
Trajectories of Industry Change
|
Parenting Advantage
|
Prahalad |
Delta Model |
Resource-Based View
|
BCG Matrix
|
Greiner
|
Kay
|
Mintzberg
|
3C's |
Porter Diamond Model |
Bricks and Clicks |
Twelve
Principles of the Network Economy
More management models
|
