Porter's Five Forces of Competition
Article Review: The Five Competitive Forces That Shape Strategy
Porter’s Lesson: Michael E. Porter’s article, the five competitive forces that shape strategy, is an article that dissects the true underlying factors of competition and industrial structure. Throughout the context of the article, Porter thoroughly explains how competition and profitability does not only derive from production of goods and services or the level of sophistication of a firm. Instead, he claims that in order for an industry to be truly competitive and profitable, the industry as a whole must hold a solid structure. Porter educates the audience by introducing the five key forces of strategy that will essentially lead to a firm’s prevalence of competitiveness. He labels these forces as direct competition, customers, suppliers, potential entrants, and substitute products. Porter claims that each of these forces of competition plays their roles within any competitive and even temporarily non-competitive industry. Porter’s main lesson for his audience is that in order for an individual firm or an industry to succeed, it must strategically know how to react to any shift within the industry, whether its competitiveness, supply and demand, economical issues, potential entrants, or even natural issues. Porter also strives to explain how a company could or could not earn a return on investment based on the intensity of the competition within the industry. All in all, Porter explicitly explains each of the five forces that shape an industries competition with a breakdown of different factors for each force, as well as real life examples that make the topic very clear for the audience to understand his lesson.
Analysis of the Lesson: Of the five forces, Porter clearly educated the reader about the importance of potential entrants and their threat to an industry. I felt that one of Porter’s greater lessons in this matter was when he described the seven major sources of entry barriers, and
Porter’s Lesson: Michael E. Porter’s article, the five competitive forces that shape strategy, is an article that dissects the true underlying factors of competition and industrial structure. Throughout the context of the article, Porter thoroughly explains how competition and profitability does not only derive from production of goods and services or the level of sophistication of a firm. Instead, he claims that in order for an industry to be truly competitive and profitable, the industry as a whole must hold a solid structure. Porter educates the audience by introducing the five key forces of strategy that will essentially lead to a firm’s prevalence of competitiveness. He labels these forces as direct competition, customers, suppliers, potential entrants, and substitute products. Porter claims that each of these forces of competition plays their roles within any competitive and even temporarily non-competitive industry. Porter’s main lesson for his audience is that in order for an individual firm or an industry to succeed, it must strategically know how to react to any shift within the industry, whether its competitiveness, supply and demand, economical issues, potential entrants, or even natural issues. Porter also strives to explain how a company could or could not earn a return on investment based on the intensity of the competition within the industry. All in all, Porter explicitly explains each of the five forces that shape an industries competition with a breakdown of different factors for each force, as well as real life examples that make the topic very clear for the audience to understand his lesson.
Analysis of the Lesson: Of the five forces, Porter clearly educated the reader about the importance of potential entrants and their threat to an industry. I felt that one of Porter’s greater lessons in this matter was when he described the seven major sources of entry barriers, and