Five Force Model

Introduction
This essay will critically evaluate the forces that influence on organization and their strategy making. There are generally five parts of evaluation in main body. Each of a part will discuss one force. In discussion, three core content would be evaluated. First is briefly introduction to each force.   Second part will critically evaluate the influence of forces. What do these forces impact on organization and How do they influence business strategy would be discussed. Third part is the evaluation of response from organization to those forces. Meanwhile, some practical examples will integrate into the evaluation to illustrate organization’s strategy in business practices.

Main body
Strategic analysis will involve some different forces that are from the business environment. This environment is what gives organization the means to survival. On the other side, it also brings organization threats. In the changing and complex business environment, these factors will play the most significant role in the organization’s strategic analysis. In general, three “layers” of environment are surrounding outside the organization. There are the macro-environment, industry environment and competitors. (Johnson et al, 2009) Generally, industry environment is more related to the single business rather than the macro competitive forces. Therefore, Organization would focus on the industry analysis in order to make a strategic plan for further development. The most significant model for industry analysis is Michael Porter’s “ Five Forces Model” that defined a way of assessing the profit potential. Five Forces analysis look at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes and competitive rivalry.

Firstly, new entrants will bring new capability and resource into industry, however, to those existent organizations, it also brings competition on raw materials and market shares. If an industry is... [continues]

Read full essay