Porters 5 Forces

Topics: Innovation, Value added, Creativity Pages: 5 (668 words) Published: May 14, 2013
Porters 5 forces


Business plan

The unexpected Incongruities, Process needs, Industry structure, Demographics Changes in perception, New knowledge

Idea, Invention, Innovation, Diffusion

Companies own assets Physical Intangible Human In the past Competitive advantage came from physical assets such as property/land/Financial clout Still important (anyone fancy taking on Apple?) but Intellectual property (patents) and key process management (we know how to do this) i.e. what we know are increasingly important Humans supply the know-how that comes from knowledge, creativity & innovation (intangibles) – how we apply that knowledge is increasingly key – Creativity

Why innovate? Extent of change? What is changed?

To gain advantage, to survive & to cope with changes in their environment.

Commercial orgs. To make a profit Public sector to deliver new services or to improve performance, efficiency & effectiveness of existing ones

Threat of competition from new entrants (eg. On-line banking) Not to innovate is to die

In short – to give strategic advantage

Complexity- Offering something others find difficult to master

Add/extend competitive factors- Move basis of competition e.g. from price to price plus features

Innovation translates knowledge into something of practical advantage or wealth creating benefit

And is it a product, a process or a service?


Incongruities or conflicts between opposing functions, requirements or values may be the start of an innovation. For example the request for a small car with still enough space on the inside seems to be incongruent. This however was solved in a new design as the Smart.

EFQM excellence model

Industry markets and market structure may offer opportunity’s for new types of services. Outsourcing of activities such as maintenance of the IT infrastructure is an example. Other examples are the merging of industry’s such as for example the merging of the computer industry with consumer electronics or IT with business consulting services.

Demographics have long been a major source of innovation creating opportunities for new types of products and services.

Changes in perception

New knowledge

Gruber & Marquis Model
Stage 1 : existing knowledge already in use
Stage 2 : discovery and invention, generating new knowledge / ideas Stage 3 : innovation, transforming knowledge into products,processes or services of economic value Stage 4 : adoption and diffusion of innovations

Innovation theories
Technology S-curve
Punctuated equilibrium
Dominant design
Absorptive capacity

Lean Engineering Continuous Improvement to enable sustainable and quantifiable change whilst focussing on eliminating waste

Seven key wastes?

* Picking the product up, putting it down, looking for it, reworking it and expediting it are the major tasks and the major cost drivers * Specify the Value
* From the perspective of the customer
* Identify the Value Stream
* Eliminate non-value added activity
* Flow
* Make the remaining value added steps flow
* Pull
* Make only what the customer asks for
* Pursue Perfection (Continuously Improve)
* Be tireless in rooting out and eliminating waste

Continuous Improvement And Standardization
K = Kaizen Activity
S = Standardization Activity


Emergence of dominant design

Design Families

Areas addressed
Safety – braking, air bags, seat belts, pillars
Performance -speed and acceleration
Comfort – heating, seats, space
Music – radio, casette, cd player, ipod connection

5s process of organisation
Set in Order
being better able to meet customer needs!


Shared Vision, leadership and the will to innovate| Clearly articulated and shared sense of purposeStretching strategic intent‘Top Management commitment’|...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Five forces on P&G Essay
  • Five Forces Model Framework Developed by Professor Michael, E. Porter Research Paper
  • Porter Generic Strategies and Samsung Essay
  • Swot, Pest, Porte's Five Forces Analysis Essay
  • Air India 5 Essay
  • Porters 5 Forces Essay
  • Porter`s 5 forces Essay
  • Porters 5 Forces Essay

Become a StudyMode Member

Sign Up - It's Free