Porter's Five Forces

Topics: Strategic management, Management, Strategic planning Pages: 3 (1043 words) Published: August 11, 2011
Assignment 1
Describe Porter’s Five–Force model and how it is helpful when developing one’s international strategy. Do you see any limitation to Porter’s modeling techniques?

Michael Porter's Five-Force model, as described and illustrated in “Porter’s Five Forces: A Model for Industry Analysis (Article from QuickMBA.com)”, goes beyond the traditional industry competitive analysis that would just compare Rivals, both current and potential, to include Suppliers and Buyers and also Product or Service Substitutes. I have not yet read Porter’s “Competitive Strategy” (1980), but understand that it is the definitive work on the introduction of the Porter Five-Force model (1979) and describes how the model can be used as a tool to not only determine the “attractiveness” of an industry, but also how a company can develop its eponymous competitive strategy. Accordingly, this five-force framework, if correctly applied according to Porter’s prescript, should help a company to better understand the forces at work in that industry and also assist in focusing the company’s management strategic vision on those forces that require special attention in the development of their international strategy. I have read the most recent update of Porter’s initial 1979 Harvard Business Review (HBR) on the Five-Force Model titled “The Five Competitive Forces That Shape Strategy: Porter HBR January 2008”. This recent article aspires to help a company to “stake out a position that is more profitable and less vulnerable to attack”. Porter thoroughly re-addresses the Rivals and the four additional competitive forces: Buyers, Suppliers, Threat of New Entrants, and Substitutes (products or services) and also addresses “fleeting factors” such as growth rates, technology, government and complementary products and services in this article. He cautions strategists to “avoid the common pitfall of mistaking certain visible attributes of an industry for its underlying structure.” p.10....
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