porters 5 forces
Porter’s 5 Forces Introduction
The model of the Five Competitive Forces was developed by Michael E. Porter in his book „Competitive Strategy: Techniques for Analyzing Industries and Competitors“in 1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes. Porter’s model is based up on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Competitive strategy should be developed based upon forecasting of the available information on the developing competitive environment and other threats faced .Porter was able to identify five competitive forces that that shapes the different industry and market. Porter five forces do was able to interpret the intensity of the competition and also the profitability and attractiveness of an industry. The corporate strategy is devised to improve the position of the respective industry in there market position as well as in brand form. Porter’s model provides the analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide on how to influence or to exploit particular characteristics of their industry.
The Five Competitive Forces
The Five Competitive Forces are typically described as follows:
1 Bargaining Power of Suppliers
Suppliers comprises of all the sources for inputs that are needed in order to provide/produce goods or services.
Supplier bargaining power is likely to be high when: 1. The market is dominated by a few large suppliers rather than a fragmented source of supply,
2. There are no substitutes for the particular input,
3. The suppliers customers are fragmented, so their bargaining power is low,
4. The switching costs from one supplier to another are high,
5. There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. This
The model of the Five Competitive Forces was developed by Michael E. Porter in his book „Competitive Strategy: Techniques for Analyzing Industries and Competitors“in 1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes. Porter’s model is based up on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Competitive strategy should be developed based upon forecasting of the available information on the developing competitive environment and other threats faced .Porter was able to identify five competitive forces that that shapes the different industry and market. Porter five forces do was able to interpret the intensity of the competition and also the profitability and attractiveness of an industry. The corporate strategy is devised to improve the position of the respective industry in there market position as well as in brand form. Porter’s model provides the analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide on how to influence or to exploit particular characteristics of their industry.
The Five Competitive Forces
The Five Competitive Forces are typically described as follows:
1 Bargaining Power of Suppliers
Suppliers comprises of all the sources for inputs that are needed in order to provide/produce goods or services.
Supplier bargaining power is likely to be high when: 1. The market is dominated by a few large suppliers rather than a fragmented source of supply,
2. There are no substitutes for the particular input,
3. The suppliers customers are fragmented, so their bargaining power is low,
4. The switching costs from one supplier to another are high,
5. There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. This
References: http://en.wikipedia.org/wiki/Facebook http://www.slideshare.net/manan/firm-strategy-analysis-facebook http://www.businessballs.com/portersfiveforcesofcompetition.htm