Six Forces Model: Strengths, Weaknesses, and Real-World Cases

This report provides a detailed analysis of the Six Forces Model, a strategic business tool used to evaluate market attractiveness and competitiveness. The report defines the model and its six key forces: competition, new entrants, end-users and buyers, suppliers, substitutes, and complementary products. It explores the strengths of the model, such as its popularity in strategic management and its ability to identify weaknesses and gauge competition. The report also discusses the weaknesses, including its limited scope and applicability. Real-world examples, such as the airline industry, are used to illustrate the application of the model. The report concludes by emphasizing the importance of the Six Forces Model in formulating effective global business strategies and adapting to customer demands.

Running head: SIX FORCES MODEL
Six Forces Model
Name of the Student
Name of the University
Author’s Note:

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Table of Contents
1. Introduction............................................................................................................................2
2. Discussion..............................................................................................................................2
2.1 Definition of Six Forces Model........................................................................................2
2.2 Strengths and Weaknesses of the Six Forces Model for formulating Business Strategy.3
2.3 Application of the Six Forces Model to Real Cases........................................................6
3. Conclusion..............................................................................................................................7
References..................................................................................................................................8

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1. Introduction
A global strategy can be referred to as the strategy that any specific organization takes
when it wants to eventually compete as well as expand within the globalized market
(Moreno-Izquierdo, Ramón-Rodríguez & Perles-Ribes, 2016). Such distinct strategy is being
pursued by, as soon as they wish to grow in the international market. It is being defined in
business after consideration of organizational strategic guide towards globalization. Different
organizations involve different global strategies within their business models for the core
purpose of incrementing sales and ensuring that the business processes are well executed
without much complexity (Cherrafi et al., 2016). The following essay outlines a brief
discussion on the strengths as well as weakness of this six forces model for the successful
creation of business strategy with application in real case studies.
2. Discussion
2.1 Definition of Six Forces Model
The six forces model can be referred to as a strategic business tool, which helps a
business to evaluate the attractiveness and competitiveness of a market properly. This
particular model eventually provides an overview, after analysis of six vital key business
activity areas as well as competitive forces, which can easily shape out the entire industry
(Akter et al., 2016). The primary purpose of this six forces model is to recognize the strengths
and weaknesses and even to formulate the corporate strategies. The six forces model provide
a holistic assessment of any particular industry for identifying the respective structural
underlining drivers of competition and profitability (Higgins, Omer & Phillips, 2015). There
are six fundamental forces, which should be considered while defining the corporate strategy
and determine the total attractiveness of the industry. Different strengths involve higher
competition, new entrants, end-users and buyers, suppliers, substitutes and finally

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complementary products (Johnson, 2016). In spite of the fact that there are several factors,
which could affect profitability in the short term; the business cycle would be able to
complete as an assessment of the competitive forces within a given market for providing a
framework to anticipate as well as influence the profit and competitiveness in the long term
and medium-term (Thompson, Strickland & Gamble, 2015).
2.2 Strengths and Weaknesses of the Six Forces Model for formulating Business
Strategy
The six critical forces of six forces model are provided in the following paragraphs:
i) Competition: Several dimensions are present, which rivals in an industry could
compete on discounting of prices like cost leadership strategy, innovation strategy, customer
orientation strategy and many more (Sia, Soh & Weill, 2016). The intensity of competition is
the highest when competitors are equal in size, and the organization does not get the
opportunity to be face issues related to this high competition.
ii) New Entrants: The new entrants are those businesses that have recently entered the
market and would be responsible for increasing the competition to a high level (Martinez-
Simarro, Devece & Llopis-Albert, 2015). The significant barriers of these distinct new
entrants involve supply-side economies of scale, demand-side economies of scale, capital
needs, incumbency benefits that are independent of sizes, unequal access to the distribution
channel and specific preventive government policies and processes.
iii) End Users and Buyers: The powerful clients could play various companies off
against one another to drive the price down or demand the highest service quality
(Soltanizadeh et al., 2016). The bargaining power is high when a limited number of buyers
would be bringing high power and elevated revenues. Moreover, the switching costs are
lowered when the customers do not lose any aspect by switching.

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iv) Suppliers: The next force is the supplier. A robust supplier could easily influence
the overall profitability of the industry via charging high prices, lowering the service qualities
and even shifting costs are involved (Indris & Primiana, 2015). It is highly concentrated than
the respective industry it is eventually selling to, and it is not dependent on the industry for
gaining revenues.
v) Substitutes: A specific substitute product fulfils the same functionality of other
products to ensure that a different outcome would not be a significant threat to the business
and this type of threat takes place when the switching costs are low, and there is a trade-off
within price and performance (Shtal et al., 2018).
vi) Complementary Products: The final force is an additional product. It eventually
refers to different products and services, which are highly compatible with the products of
any particular industry (Hueske, Endrikat & Guenther, 2015). The overall impact of these
complementary products is dependent on the reliance on the product or service.
The major strengths of the six forces model for successful formulation f a business
strategy are provided in the following paragraphs:
i) The first and the foremost important and significant advantage of this six forces
model is its popularity in strategic management. This particular model is responsible for
describing all types of movements from the resource suppliers to customers (Shirokovа,
Bogatyreva & Beliaeva, 2015). As a result, when a global business strategy is being
formulated, six forces model helps in identifying the weaknesses and approach a successful
one.
ii) Another significant and essential advantage of this six forces model is that it
provides any type of useful information for the issues of this organizational planning. It even
enables for the proper determination of the industrial attractiveness (Higgins, Omer &

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Phillips, 2015). The model helps decide on entering or leaving the industry. Hence, the model
is highly useful for checking the overall impact of competitive forces. The business strategy
would be successfully executed with six forces model as the position of the business would
be on top position.
iii) The third vital and significant advantage of this six forces model for formulating a
business strategy helps in gauging competition. The organization is operating as when the
organization is performing, where the game is low, then it could comprise of pricing power
that results for earning good profits (Thompson, Strickland & Gamble, 2015). The respective
pricing power of the organization is inversely proportional to the high competition that is
present within the industry. When the competition is high, the pricing power gets low. The
business strategy hence would get ideas about the detailed analysis of different competitors in
the existing market.
iv) Another critical and noteworthy advantage of this six forces model is that it is
extremely helpful in planning. The industries that need high investments are dangerous as
when the organization has made investments, it could not be backed off, and the organization
could quickly identify the sectors, in which the substitutes' threats get lowered. The new
players could quickly enter into the industry for leading to high competition (Sia, Soh &
Weill, 2016). As a result, the business strategy execution becomes quite more comfortable
with such planning, and the respective company gains maximum benefits without much
complexity.
Despite having several advantages, few disadvantages are also present for the six
forces model, and these are provided in the following paragraphs:
i) One of the major and the most significant disadvantages of this six forces model
during the formulation of business strategy is that it does not consider any other factor, apart

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from the mentioned factors (Martinez-Simarro, Devece & Llopis-Albert, 2015). Hence, the
external environment could be extremely threatening for a business if the forces of the model
are not present. It will not become beneficial for the business as they would not be able to
identify the weaknesses successfully.
ii) The second distinct and noteworthy disadvantage of this six forces model during
the formulation of business strategy is that no industry is a perfect fit for the model
(Shirokovа, Bogatyreva & Beliaeva, 2015). Hence, no industry can comprise of all the
positive factors to formulate a successful business strategy. Due to the shortcomings, the
strategy can become a major threat to the business, and they might lose their business
attributes.
iii) Six forces model is not at all useful for all types of industries, and hence it could
not be applied in every industry (Hueske, Endrikat & Guenther, 2015). Hence, the issues
related to the formulation of the business strategy can turn into the major reasons for failure
in the company.
2.3 Application of the Six Forces Model to Real Cases
Six forces model can be applied to different industries for proper analysis of the
external environment of a specific organization. It helps in reducing the chance of failure of a
global business strategy (Indris & Primiana, 2015). Four distinct types of strategies are
present, which are exporting, transnational, multi-domestic and standardization. Such strategy
is important for allowing the business to compete in a global market for remaining more
focused and better informed about the services and products, offered by them (Martinez-
Simarro, Devece & Llopis-Albert, 2015). A connected business helps the revenue of the
business not to be confined by borders, and a business could easily employ the global
business strategy for reaping the trading rewards in a worldwide market. It is extremely

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effective for any business to gain competitive advantages globally. Moreover, it helps in
reducing the overall operational costs to a high level, and the firms get the opportunity to
obtain a standardized product (Soltanizadeh et al. 2016). One of the major and the most
significant examples of such industry is the airline industry.
Airline Industry: When this particular model is applied to the airline industry, it
becomes quite beneficial. It helps in the identification of the significant weaknesses that can
be problematic for the airline industry. The threat of new entrants is required to be known for
checking their barriers, such as distribution channel, government legislations, service or
product differentiation and cost of entry (Shtal et al., 2018). Moreover, the threat of substitute
products and services is also analysed for this purpose, such as train, bus or car. The other
factors, like buyers' power, are high, and the suppliers' power is low. Due to the involvement
of several airline companies in different countries, the competitive rivalry is high for this
specific industry. As a result, the business strategies are needed to be analysed on top priority.
3. Conclusion
Therefore, from the above discussion, a conclusion can be drawn that it is required to
ensure that different global business strategies are being executed properly to gain maximum
success. Moreover, a comprehensive global marketing strategy is necessary for the business
to adapt quickly wherever required for the customer trends and demands within the global
market place. It is needed to set different goals for the international strategy and understand
the respective competition for ensuring that the marketing strategy is effective and would
provide significant advantages. The above-provided essay has described the strengths as well
as weaknesses of the six forces model with real cases.

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References
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