Five Competitive Forces & Creating the Best Workplace
THE FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY
Porter on his 1979 HBR article states 5 competitive forces that can hurt your desired profits:
1. Established rivals (old competition)
2. Understanding the customer (their needs and desires)
3. Suppliers (how to make it less expensive)
4. New players (new or temporal competition)
5. Substitutes (other services or products that may replace ours)
If the forces are intense, companies don’t obtain attractive returns for their investments. If forces are favorable, companies are profitable.
They impact in middle and long term’s profitability.
The strongest competitive force determines the profitability and become the basis of the strategy.
The five forces reveal if a company is truly attractive, and reveal why industry profitability is what it is. They help to analyze strengths and weaknesses.
By understanding the 5 competitive forces, you are now able to develop a strategy to gain more profits.
1. Position your company where the forces are weakest (What is the potential of this business?)
2. Exploit changes in the forces (Structural changes create new needs and ways to satisfy them).
3. Reshape the forces in your favor (Increment profits by reducing leaks, unique products, wider accessibility, expand services, standardize specifications).
The best strategies exploit at least one of these possibilities. Pitfall of mistaking:
1. Fast-growing industries are not always attractive.
2. Technology and innovation are not enough to make a business attractive or unattractive.
3. How government policies affect the 5 forces.
Don’t forget to:
Define carefully the industry in which you want to work.
Be aware of competition.
CREATING THE BEST WORKPLACE ON EARTH
People will not follow a leader they think is unauthentic. People want to feel they matter in the company they work for.
Organization of your dreams:
1. Individual differences are nurtured. Workers who feel a great engagement will make
Porter on his 1979 HBR article states 5 competitive forces that can hurt your desired profits:
1. Established rivals (old competition)
2. Understanding the customer (their needs and desires)
3. Suppliers (how to make it less expensive)
4. New players (new or temporal competition)
5. Substitutes (other services or products that may replace ours)
If the forces are intense, companies don’t obtain attractive returns for their investments. If forces are favorable, companies are profitable.
They impact in middle and long term’s profitability.
The strongest competitive force determines the profitability and become the basis of the strategy.
The five forces reveal if a company is truly attractive, and reveal why industry profitability is what it is. They help to analyze strengths and weaknesses.
By understanding the 5 competitive forces, you are now able to develop a strategy to gain more profits.
1. Position your company where the forces are weakest (What is the potential of this business?)
2. Exploit changes in the forces (Structural changes create new needs and ways to satisfy them).
3. Reshape the forces in your favor (Increment profits by reducing leaks, unique products, wider accessibility, expand services, standardize specifications).
The best strategies exploit at least one of these possibilities. Pitfall of mistaking:
1. Fast-growing industries are not always attractive.
2. Technology and innovation are not enough to make a business attractive or unattractive.
3. How government policies affect the 5 forces.
Don’t forget to:
Define carefully the industry in which you want to work.
Be aware of competition.
CREATING THE BEST WORKPLACE ON EARTH
People will not follow a leader they think is unauthentic. People want to feel they matter in the company they work for.
Organization of your dreams:
1. Individual differences are nurtured. Workers who feel a great engagement will make