Porter's Five Forces

In: Business and Management

Submitted By nadia111
Words 1358
Pages 6
Introduction
The porter forces model was first developed in 1979 by Michael .F. Porter of the Harvard as structure for assessing and evaluating the competitive position and power of an organization, the model is grounded on the concept that there are five forces which ascertain the competitive intensity of the market (Porter, 2008).
Figure 1.1 shows a diagram of the five forces model, (Flesicher, 2007)
Porter’s five forces model is quite useful and it provides a number of benefits , its most contribution is that it's a relevant tool to help organizations find the fundamental structuring components of their given business operation. It is the map showing where the company is and where they hope or want to be (Flesicher, 2007).Further more Schmidt (p.82, 2010) adds that “The model help to identify where the power is in the present business situation, This is important both in understanding the might of a company’s current competitive situation and the power of a position that the company wants to move to.”By understanding where the intensity is, the model can be used to identify the areas of strength, to improve failings and prevent mistakes; also strategic analysts often use the theory to know if new products or services are potentially profitable (Roy, 2011).
The five forces model is a tool for analysising the competitive environment as Henry (p.70, 2008) states that “It allows an organization to determine the attractiveness or profit potential of a given market by examining the interaction of the Porter’s five forces .” it’s the altogether power of these five forces that eventually determines an organization’s return on investment or the profit potential within a given market. Porter (2008) adds that by examining all the five forces an organization is able to analyse its potential to compete effectively in a market . The five forces model also allows the…...

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