Business Strategy
Critical Analysis and Evaluation of Porters Five Forces in today’s Dynamic Business Environment
INRODUCTION
The environment in which organisations operate, changes day after day, with growing competition among its competitors for greater market share. As a result of intense competition among these organisations, it becomes very necessary for both new entrant and the incumbent organisations to periodically carry out analysis to ascertain strengths and the weaknesses are. This assay will focus mostly on the criticisms and evaluation of Porter’s Five Forces model in today’s dynamic business environment.
For better understanding, this assignment has been organised in four sub- headings, they are as follows: the general overview of Porter’s Five Forces model; the importance or usefulness of Five Forces model; the criticisms and evaluation of Porter’s model; the recommendation and finally the conclusion.
Overview of Porter’s model
Johnson et al (2011) described Porter Five Forces as a strategic tool that helps identify the attractiveness of an industry in terms of five competitive forces: the threat of new entry, the threat of substitutes, the power of buyers, the power of suppliers and the extent of rivalry between competitors. Porter (1980) argues that this model is based on the insight that a good business strategy should meet the opportunities and threats in the organizations external environment. Particularly, competitive strategy should be based on an understanding of industry structures and the way they change.
From the above explanation we can see that Porter’s Five Forces is a simple tool that supports strategic management in decision making through understanding where strength and weaknesses lie.
Importance of Porter’s Five Forces
• The Porter’s Five Forces is a simple but powerful tool that supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of the firm’s current
INRODUCTION
The environment in which organisations operate, changes day after day, with growing competition among its competitors for greater market share. As a result of intense competition among these organisations, it becomes very necessary for both new entrant and the incumbent organisations to periodically carry out analysis to ascertain strengths and the weaknesses are. This assay will focus mostly on the criticisms and evaluation of Porter’s Five Forces model in today’s dynamic business environment.
For better understanding, this assignment has been organised in four sub- headings, they are as follows: the general overview of Porter’s Five Forces model; the importance or usefulness of Five Forces model; the criticisms and evaluation of Porter’s model; the recommendation and finally the conclusion.
Overview of Porter’s model
Johnson et al (2011) described Porter Five Forces as a strategic tool that helps identify the attractiveness of an industry in terms of five competitive forces: the threat of new entry, the threat of substitutes, the power of buyers, the power of suppliers and the extent of rivalry between competitors. Porter (1980) argues that this model is based on the insight that a good business strategy should meet the opportunities and threats in the organizations external environment. Particularly, competitive strategy should be based on an understanding of industry structures and the way they change.
From the above explanation we can see that Porter’s Five Forces is a simple tool that supports strategic management in decision making through understanding where strength and weaknesses lie.
Importance of Porter’s Five Forces
• The Porter’s Five Forces is a simple but powerful tool that supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of the firm’s current