Harvard Business Review Competitive Forces Paper
Michael Porter, an associate professor and a young economist, helped to form constant research in the area of academics and he also positively affected the manner in which organizations execute administrative approaches as a result of his five competitive forces publications. Porter’s five competitive forces are strategies that are used as tools to analyze the value of the industry. According to Porter (2008), “competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants, and substitute products”. Many business designers seem to only focus on their current competitors, Porter explains that the other forces such as: threat of new entrants, bargaining powers of the buyers, threat of substitute product or services, and bargaining power of the suppliers within the organization are just as important. Sometimes, government is added as the sixth competitive force. “The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious” (Porter, 2008).
If is Porter’s belief that the five forces model permits the management to detect the strengths and weaknesses of the organization while the model represents the entire supply chain’s involvement and the cooperation of those involved. The five forces model has the capability to present a plain and vibrant image of the organization’s activities and the role it plays in generating importance. Subsequently, by providing a wider understanding of the competition that shapes the underlying industry structure, it allows managers to implement fruitful competitive strategies (Porter, 2008).
The threat of new competitive entrants creates an advantage because there would be a larger variety of better products. The strength of the threat would be induced by...