An industry is not a closed system, competitors exit and enter, and suppliers and buyers have a major effect on the prospects and profitability of the industry. However, Porter points out that the structure of an industry will not change in the short term. Industry structure is something that irrespective of the general economic climate or short term fluctuations in demand fundamentally affects return on investment. Structural change is slow and often associated with political and labour conflict. Structural factors are often cited as holding back development and in some cases governments make funds available to mitigate social problems caused by structural change. By understanding this Porter’s five forces framework that used to analyse industry’s competitive forces and to shape organization’s strategy, we can apply it in our company by developing the following steps below:
1. Gather the information on each of the five forces
In this step, managers / strategists should gather information about their industry and to check it against each of the factors influencing the force.
2. Analyze the results and display them on a diagram / matrix
In this step, managers / strategists should analyze the gathered information and determine how each force is affecting an industry. For example, if there are many companies of equal size operating in the slow growth industry, it means that rivalry between existing companies is strong. The thing that