Five Forces Model Framework Developed by Professor Michael, E. Porter

Topics: Strategic management, Supply chain management, Management Pages: 5 (1310 words) Published: January 16, 2013
Response to Week 2 DQ:
Five Forces Model framework developed by Professor Michael, E. Porter of Harvard Business School in 1979, is a powerful strategic business assessment tool useful in strategic assessment of business position in a volatile competitive market situation to understand where the business competitive power positions and analyze both the current competitive strength and the position which the business is intended to move into to gain profitability while and customer’s desirability’s. Chapman, A. (2009) established that, “Porter's Five Forces Model offers advocated opinions which can improve a broad and sophisticated analysis of competitive market positions, as might be used when constructing business assessment strategies, plans, or making investment decisions about a business” Porter’s reputable five forces model are useful framework to GE Oil&Gas and Energy business operations to determine its competitive power in situations as follow; 1. Threat of Product Substitution: GE operates an aftersales market services to all its customers globally from our Global Sales & Services segments on framework agreements and contractual services agreements basis. The essence of this agreements, are because GE been an Original Equipment Manufacturer (OEM) and considering the technological designs of their original equipment’s, liaisons with customer for partnership for aftersales market follow-on to ensure provision and training of expertise for equipment handling and services. And also, GE operational capabilities in manufacturing their equipment spare parts are GE strategic competitive market position strengths to shade off fair for threat of product substitutes. This strategic model with sophisticated technological innovative designs guarantees GE to gain customer’s unweaving attractiveness.

2. Threat of New Entrants: Among many key competitors of GE, Rolls Royce, Siemens, Solar Energy etc. are GE new market entrants in Oil&Gas and Energy industry but because of GE global (Manktelow, J. & Carlson, A. 2012) strong and durable barriers to entry, preserve favorable market position and take fair advantage of it following its innovative technological oriented equipment’s and industrial operational structure to gain power in cost and time to enter market to compete effectively, leverage to protect threat in technology imitation, barrier to entry and alternative access to distribution channels. By this strategic model, (Williamson et al. (2004, p.82) GE advance large suck cost of entry to generate profits in their existing and innovative products without attracting new entrants.

3. Buyers Power: GE Products are sold globally basically to the 3rd and emerging 3rd world countries governments and world class manufacturing companies. Because of this fact, GE has built a strong competitive market position and publishes their aftermarket services rates (the cost of field service engineers and provision of expertise for equipment handling etc.) annually and products like running spare parts quarterly or give customer expected time of cost change of some spare parts (due to foreseen supply chain network, economic situation etc.) through a proposal which makes GE products enjoys customers price friendly approach among its similar product competitors thereby, lowering the buyers power in their choice of switching costs and purchase some items in large quantities since in GE technology protection capability, neither the customer nor GE competitors have the ability of producing such products hence buyers power to dictate buying price or bringing down product prices are incapacitated but rather, enjoy discounted prices as maybe requested.

4. Suppliers Power: Based on the statement of fact as described by Williamson et al. (2004, p.82, figure 7.3.4), that the factorial influences of buyers power are similar to that of suppliers power but acts in opposite directions. There is need therefore, for...
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