Porter's five forces

Topics: Competition, Question, Management Pages: 2 (582 words) Published: October 23, 2014
1.Porter have developed five forces, basically it is a framework to analyze the level of competition within an industry in order to develop a business strategy. The first force as what Porter defined is the threat of new entrants, which can eventually decrease the profitability for all firms in their particular industries. This happens whenever profitable markets yield high returns that can attract new firms. The second force is the threat of substitute products or services or products, this is all about the existence of new products outside the realm of the common product boundaries which increases the propensity of customers for them to switch to alternatives, the factors which can affect this are ease of substitution, switching costs and perceived level of product differentiation. The third one is bargaining power of customers, it is also described as the market of outputs, wherein, it is the abilities of every customers to put every firm under pressure, which also affects the customer’s sensitivity to changes. It is also sensitive in the sense that customers have the option to buy or not to buy. The fourth one is the bargaining power of suppliers, which can also be defined as the market of inputs. They are the one who provides for the firm’s raw materials, component, labor, and services. Suppliers have the option to refuse to work with the firm or charge excessively high prices for some particular resources. The last one is the intensity of competitive rivalry; this is about the strategies of a particular business in order to outwork its rival. It is about the competition on market shares, customers and most of all, profit.

2.The most significant force, in my opinion, is the intensity of rivalry, because it is what I see in today’s businesses. Globe competing with Smart, Apple competing with Samsung, etc. Competition is everything; it is all about having new customers and maintaining their loyalty. And why is that hard? Basically, it is hard because...
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