Analysis of Porters 5 Forces Model and Its Application in...

Topic of the Assignment ANALYSIS OF PORTER’S FIVE FORCES MODEL AND ITS APPLICATION IN E-COMMERCE BASED ECONOMY PORTER’S FIVE FORCES FRAMEWORK: A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Michael Porter has postulated that the intensity of competition in an industry is determined by its underlying economic structure. Porter (1985) defined the forces which drive competition, contending that the competitive environment is created by the interaction of five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of the buyers, and†¦show more content†¦The Porter’s Five Forces model is a simple tool that supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of a firm’s current competitive position, and the strength of a position a company is looking to move into. Despite the fact that the Five Force framework focuses on business conc erns rather than public policy, it also emphasizes extended competition for value rather than just competition among existing rivals, and the simpleness of its application inspired numerous companies as well as business schools to adopt its use. LIMITATIONS OF THE FIVE FORCES MODEL: Porter’s model is a strategic tool used to identify whether new products, services or businesses have the potential to be profitable. However it can also be very illuminating when used to understand the balance of power in other situations. Porter argues that five forces determine the profitability of an industry. At the heart of industry are rivals and their competitive strategies linked to, for example, pricing or advertising; but, he contends, it is important to look beyond one’s immediate competitors as there are other determines of profitability. Specifically, there might be competition from substitute’s products or services. These alternativesShow MoreRelatedGoogle Inc Case Study1847 Words   |  8 Pagesrecommendation to Google. From industrial and internal analysis conducted, it is found that search industry is still favorable for Google. In addition, Google is in a great position in the industry with its unique search solutions and advertising techniques. However, with its creativity-oriented culture and diversified products and services, Google can also venture into other market opportunities such as ecommerce, portal and PC application services. Factors to be considered are mission alignmentRead MoreCritically Evaluate the Approaches of Michael Porter and Gary Hamel to the Paradox of Markets and Resources. Give Examples of How Changing World and/or Organisational Circumstances Affect a Strategic Leader’s Choice Between These Approaches.2412 Words   |  10 Pagesfor businesses looking to deliver profitable growth for its stakeholders. Michael E. Porter is a leading authority on competitive strategy, the competitiveness and economic development of nations, states, and regions, and the application of competitive principles to social problems such as health care, the environment, and corporate responsibility. He is the Bishop William Lawrence University Professor, based at Harvard Business School. 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