A graphical representation of Porter's five forces Porter five forces analysis is a framework tha... more A graphical representation of Porter's five forces Porter five forces analysis is a framework that attempts to analyze the level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of an Industry. Attractiveness in this context refers to the overall industry profitability. An " unattractive " industry is one, which the combination of these five forces acts to drive down overall profitability. A very unattractiveness industry would be one approaching " pure competition " , in which available profits for all firms are driven to normal profit. This analysis is associated with its principal innovator Michael E. Porter of Harvard University. Porter referred to these forces as the macro environment, to contract it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of these normally requires a business unit to reassess the market place given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to imply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in access of the industry average. Porter's five forces include-three forces from 'horizontal' competition: the threat of substitute products or services, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. Porter developed his five forces analysis in reaction to the then-popular SWOT analysis, which he found unrigorous and ad hoc[1]. Porter's five forces is based on the structure-Conduct-performance paradigm in industrial organizational economics. It has been applied to diverse
A graphical representation of Porter's five forces Porter five forces analysis is a framework tha... more A graphical representation of Porter's five forces Porter five forces analysis is a framework that attempts to analyze the level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of an Industry. Attractiveness in this context refers to the overall industry profitability. An " unattractive " industry is one, which the combination of these five forces acts to drive down overall profitability. A very unattractiveness industry would be one approaching " pure competition " , in which available profits for all firms are driven to normal profit. This analysis is associated with its principal innovator Michael E. Porter of Harvard University. Porter referred to these forces as the macro environment, to contract it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of these normally requires a business unit to reassess the market place given the overall change in industry information. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to imply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in access of the industry average. Porter's five forces include-three forces from 'horizontal' competition: the threat of substitute products or services, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. Porter developed his five forces analysis in reaction to the then-popular SWOT analysis, which he found unrigorous and ad hoc[1]. Porter's five forces is based on the structure-Conduct-performance paradigm in industrial organizational economics. It has been applied to diverse
Uploads
Papers by wudu peter