Competitive Analysis : Porter's Five Forces Framework

Michael Porter wrote about five forces affecting the profitability and viability of companies. The five forces are existing competitors, new entries into the market, substitute products, bargaining power of customers, and the bargaining power of suppliers. (quickmba)

Porter's Five Forces is a simple but powerful tool that consist of 5 different forces to understand the competitiveness of your business environment, and for identifying your strategy's potential profitability. The five forces are degree of rivalry, threat of entry, threat of substitutions, buyer power, and supplier power. Each force is helpful in their own way to get to know your rivals a lot better and get to know what can happen in your market.

Porter’s Five Competitive Forces Analysis is a framework developed by Michael E. Porter of Harvard Business School for study of industry analysis by analyzing five competitive forces which define industry and its business strategy. These five competitive forces determine the competitive advantages, disadvantages and attractiveness or profitability of industry.

The success of a business will be determine by the response against the threat that these competitive forces generates (Hinton 2009). Figure 2 highlighted the main threats and competitive forces for my chosen company, focused in the two main: Threats of the new entrants and existing competitors.

Examining an industry through the lens of Porter’s Five Forces model provides potential investors with key factors to consider for the overall industry (Porter, 2008):

Slide 2: Michael Porter's five forces framework allows us to determine the pricing power within a given industry, and can be tailored to an specific firm within that industry. The five forces are bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat of substitutions, and the intensity of rivalry within the industry.

Application of Porter’s five forces analysis focuses on industry and market analysis, measuring key elements of a relevant market environment and ultimately how healthy that market looks for a business. These key forces include buyer power, supplier power, threat of new competitors, threat of substitution, and existing competition. Where competition is fierce, market size low, supply chain weak, competition aggressive and plentiful, pricing and margins low, it’s likely this market would be considered unhealthy for a company to enter. The fewer or lesser such items, the healthier a market might be and more likely to be considered by a company.

Porter’s five forces model helps companies develop competitive strategies. By using this tool, they will have an overview of what is happening and what will be happening in a business. This is a helpful tool because this involves different factors contributing to the business such as competitors, substitutes, buyers and suppliers.

The firm thus faces vast competition from the market in relation to procurement of inputs and sale of outputs. Porter’s Five Forces Model identifies the five sources of competitive pressures affecting businesses (Porter, 1980).

Porter’s five forces is an effective tool used to analyse competitive markets. Porter’s five forces looks at different aspects which the business interacts with daily such as the supplier Power, Buyer power, competitive rivalry , the threat of substitute products and services and the threat of new entrants. These aspects reside in the macro-environment; therefore the business has no control over these aspects. However, KFC and Nando’s may influence these aspects and these aspects also influence the business. Problems experienced in the macro environment can contribute to the success of the business. This tool was developed by Michael Porter for analysing the industry within which the business operates. This tool is very useful as it looks at the industry within which the business is operating as a whole.

A start to a new job, a start to a new career within an unfamiliar industry. The question was what can I expect and is it excitement or nervousness unfolding. As I entered into the new role I am faced with emotional state of mind coupled with mixed reactions from my fellow colleagues as to what will the change be and how will it impact on us as people within our business. One of Albert Einstein quotes seemed appropriate, “strive not to be a success, but rather to be of value”. My interpretation of this is that adding value will undeniably equate to success, but it’s to the approach one takes within an organisation to change that ultimately matters. There are many aspects to take into account but the one gap that requires urgent attention as

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.

The main objective of this assignment is to provide background information on a product or service that will be launched by an organization. The organization that we choose was Apple and the product that we are providing background information for is the new IPhone 6. In this paper, we will cover an overview of the organization, a description of the product, an SWOT analysis of the organization and offering, competitive analysis of the organization and offering to use Porter 's five competitive forces model, the criteria that we used to segment our market, a description of our target market, and the needs that cause our target market to buy including emotional and logical drivers. Lastly, we will have a written positioning statement that

Threat of New Entrants. New entrants into the industry are firms that do not currently compete in the industry but may in the future (Ketchen & Short, 2015, Section 3.3). New entrants have a tendency to reduce potential profits of an industry by increasing the competitiveness, which could reduce the quantity of clients that organizations rely on to visit its operation. According to Ketchen and Short new entrants can be “start-up” companies created by entrepreneurs, foreign firms that decide to enter a new geographic area, supplier firms that choose to enter their customers; business, or buyers firms that

In week two we covered topics that explore methodologies that can be used to analyze the industry that a company is in. In chapter 3 of the text some of the main topics include industry profitability and attractiveness which can be analyzed by using “Porter’s Five Forces of Competition Framework” (Grant, 2010; pg 69). The five forces include competition from substitutes, new market entrants, and established firms as well as the power of buyers and suppliers. One of the main topics with this framework is the availability of substitutes which addresses the sensitivity to the price of a product or service and when customers will switch. Porter’s framework does not include the availability of complimentary products. The threat of