Porter's Five Forces

Topics: Strategic management / Pages: 7 (1724 words) / Published: Dec 15th, 2013
The five competitive forces that shape strategy

Introduction

The five competitve forces that shape strategy also know as Porter’s five forces was first pubilshed in 1979 in the Harvard Business Review by a young associate professor at the Harvard Business School, Michael E. Porter. This article started a revolution in the strategy field and has since than shaped a generation of academic research and business practise. Throughout the last thirty years Porter’s Five Forces Analysis has been the most used strategy tool in academics as well as management training. (Porter, 2008) Porter used a certain structure for his study, called framework. In a framework only the smallest number of core elements are used to capture the full richness of a phenomenon. (Henry, 2008)
I’ve chosen to work on Michael Porter’s Five Forces Analysis because I think it can provide us with the necessary knowledge about the structure of the electronic manufacturing services industry and help us implementing a strategy that leads Xeltronics to success.

An analysis of Porter’s Five Forces

Porter’s Five Forces framework is undertaken from the perspective of an existing business. Even though every business is different, the forces that affect each business’s performance and profitability are common to all organisations within one industry. Porter’s model can, despite developed form the view of an incumbent firm, be as well used for the decision to enter a new market or refrain from doing so. (Henry, 2008)
Porter’s analysis is a tool for assessing the competitive environment in a certain industry. Understanding the competitive forces, and their causes, exposes the roots of an industry’s profitability and provides an outlook for the future. The five forces are crucial for a company’s strategy. Michael E. Porter (2008) defines the five forces that shape strategy as following: (1) threat of new entrants, (2) the bargaining power of buyers, (3) bargaining power of suppliers, (4)



References: Anthony Henry (2008) Understanding Strategic Managment 68-80, Oxford University Press, Oxford UK Michael E. Porter (2008) The five competitve forces that shape strategy, Harvard Business Review retrieved 05.12.2013 George Stonehouse, Bill Houston (2013) Business Strategy (134-142), Routledge, Oxford UK Michael E. Porter (1979) How competitive forces shape strategy in: Strategic Planning: Readings, P. J Smith (102-116) Juta and Company Ltd, 2000 Joan Magretta (2012) Understanding Michael Porter: The Essential Guide to Competition and Strategy, Harvard Business Press

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