Evaluate the Relevance of Porter’s Five + 1 Model to Organisations in Industry and Commerce
Porters 5 + 1 force model is an evaluation tool that is used in analysing the micro environment. It uses six variables (power of suppliers; power of buyers; threats of substitute products; threat of new entrants; intensity of rivalry and the recent addition “stakeholders”) to analyse the micro environment, so as to be able to create a representation of the general business environment as it relates to the organisation within its operating environment or industry. By using this model, it can become easier for management to navigate the highly competitive and dynamic markets of today.
Using the Porters five + 1 forces model which is a powerful analysis tool, corporate managers are empowered to better analyse the current position of the industry in which they are operating in an easy to understand way which is well structured. In strategic management, it is critically essential for managers and directors of firms operating in the same industry to understand the five competitive forces acting on and between organizations in the same industry. By understanding these forces, they will place themselves in a better position to determine the attractiveness of that industry. There are several benefits that a firm can realise from using the Porters 5 + 1 force model in analysing its macro environment, but just as any other model that has been developed by man, there are also short comings to using this model. Firstly we shall look at the benefits of using this model and then evaluate the short coming of the model so as to ultimately have a true picture of the value that a firm may expect from using this model.
A comprehensive approach to Industry analysis
The Porter 's five + 1 forces framework or model provides a single straightforward approach to analysing the structure of an industry. Utilisation of the five + 1 forces model of analysis aids in the identification and determination of the attractiveness of an industry which is also the chief determinant of the level
Using the Porters five + 1 forces model which is a powerful analysis tool, corporate managers are empowered to better analyse the current position of the industry in which they are operating in an easy to understand way which is well structured. In strategic management, it is critically essential for managers and directors of firms operating in the same industry to understand the five competitive forces acting on and between organizations in the same industry. By understanding these forces, they will place themselves in a better position to determine the attractiveness of that industry. There are several benefits that a firm can realise from using the Porters 5 + 1 force model in analysing its macro environment, but just as any other model that has been developed by man, there are also short comings to using this model. Firstly we shall look at the benefits of using this model and then evaluate the short coming of the model so as to ultimately have a true picture of the value that a firm may expect from using this model.
A comprehensive approach to Industry analysis
The Porter 's five + 1 forces framework or model provides a single straightforward approach to analysing the structure of an industry. Utilisation of the five + 1 forces model of analysis aids in the identification and determination of the attractiveness of an industry which is also the chief determinant of the level