Porter’s Five Forces Model - Assignment

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LESSON 3. STRATEGY ANALYSIS
D A P 2 3 7 : S T R A T E G I C A N D
C O N T I N G E N C Y M A N A G E M E N T
Porter’s Five Forces Model of
Competition
Strategic groups within Industries

O R T E Z A , C H R I S T O P H E R J O H N V .
D A P 2 3 7 : S t r a t e g i c a n d C o n t i n g e n c y M a n a g e m e n t
I. Porter's Five forces Model of Competition
II. Alternatives to Porter's Five forces Model of Competition
III. Strategic groups within Industries
OUTLINE OF TOPICS
WHAT WE'LL DISCUSS
I. MICHAEL E. PORTER'S
FIVE FORCES MODEL
Porter's Five Forces was originally developed by Harvard
Business School's Michael E. Porter in 1979.
The model was published in Michael E. Porter's book,
"Competitive Strategy: Techniques for Analyzing Industries
and Competitors" in 1980.
Since its publication in 1979, it has become one of the
most popular and highly regarded business strategy tools.
Porter recognized that organizations likely keep a close
watch on their rivals, but he encouraged them to look
beyond the actions of their competitors and examine what
other factors could impact the business environment.
MICHAEL E. PORTER
PORTER'S FIVE FORCES MODEL
D A P 2 3 7 : S t r a t e g i c a n d C o n t i n g e n c y M a n a g e m e n t
MICHAEL E. PORTER
"Understanding the competitive
forces, and their underlying
causes reveals the roots of an
industry's current profitability
while providing a framework for
anticipating and influencing
competition (and profitability)
over time,"
Porter's Five Forcesis a simple but
powerful tool for understanding the
competitiveness of your business
environment, and for identifying your
strategy's potential profitability.
The five forces model looks at five specific
factors that determine whether or not a
business can be profitable in relation to
other businesses in the industry.
buyer
power
supplier
power
threat of
new entry
threat of
substitution
competitive
rivalry
D A P 2 3 7 : S t r a t e g i c a n d C o n t i n g e n c y M a n a g e m e n t
LOOKS AT THE
INDUSTRY'S ECONOMY
AS WHOLE
MACRO TOOL IN
BUSINESS
ANALYTICS
In order to understand where your company or business fits in the industry
landscape, Porter's Five Forces should be used in conjunction with a SWOT
analysis.
IN RELATION TO SWOT ANALYSIS
FOCUS ON A SPECIFIC
COMPANY'S DATA
AND ANALYSIS
MICRO
ANALYTICAL
TOOL
PORTER'S FIVE FORCES
MODEL
Competitive Rivalry
Threat of new entry
Buyer Power
Supplier Power
Threat of substitution
D A P 2 3 7 : S t r a t e g i c a n d C o n t i n g e n c y M a n a g e m e n t
buyer
power
supplier
power
threat of
new entry
threat of
substitution
competitive
rivalry
Porter's Five Forces is a business analysis
model that identifies and analyzes five
competitive forces that shape every industry
and helps determine an industry's weaknesses
and strengths.
This model helps in explaining why various
industries are able to sustain different levels
of profitability.
Porter's model can be applied to
any segment of the economy to understand
the level of competition within the industry
and enhance a company's long-term
profitability
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