Porter's five forces contribution to the SWOT model

Thèmes abordés

SWOT model Porter's five forces 5 forces SWOT PESTEL PEST

Résumé du document

The SWOT model, abbreviation of "strengths, weaknesses, opportunities and threats", is a strategic tool, defined in 1971, for helping a company to analyze its internal context (strengths and weaknesses) and its external context (opportunities and threats), which have an impact on its activity. This model is built as a matrix, which helps the company to link and analyze the four factors to draw its strategy.

In this assignment, we aim to identify and discuss the contribution of Porter's five forces model to the SWOT analysis. In order to do this, we will first introduce Porter's five forces model.

Porter's five forces model had been developed by M.E. Porter in 1980, as a complex framework to help a company to identify the different aspects of its industry and the impacts between them and the industry. It includes the competition industry, the entrants (or the barriers to entry), the buyers, the substitutes and the suppliers of the industry. This model is one of the leading frameworks to build a strategy, it helps companies to choose and implement a strategy coherent with their environment, in order to be profitable and safe in their industry.

Extraits

[...] Porter's five forces draw a complex and more precise analysis of the competition position of the company than the SWOT analysis and help to understand the value chain of the company, and thus, where to cut the costs, or where to add value, which is an important part of the strategy planning, e.g. Thorntonsplc, which is a manufacturer and a retailer of specialist chocolate, we saw that they were doing manufacture, retail, franchise, they also have a partnership with a card retailer The SWOT analysis highlighted the wide product range, the owned distribution network, the own manufacturing network as strengths. [...]

[...] The weaknesses of the SWOT model The SWOT analysis helps the company to draw a portrait of the internal context (in terms of strengths and weaknesses) and the external context (in terms of opportunities and threats). The aim is to help the company to plan and build its strategy, finding a balance between the internal and external value, coherent with its facts and figures (Mintzberg 1994). Despite its widely use in companies and schools, the SWOT analysis seems to be ineffective and has misleading results, highlighted Hill and Westbrook (1997). Strategy is interdependent of the context, the environment. Before using any tools, such as SWOT, the company has to do an environment analysis. [...]

[...] ' J Thompson & F Martin, ‘Strategic Management', Thomson Introduction The SWOT model, abbreviation of “strengths, weaknesses, opportunities and threats, is a strategic tool, defined in 1971, helping a company to analyze its internal context (strengths and weaknesses) and its external context (opportunities and threats), which have an impact on its activity. This model is built as a matrix, which helps the company to link and analyze the four factors to draw its strategy. In this assignment, we aim to identify and discuss the contribution of Porter's five forces model to the SWOT analysis. In order to do this, we will first introduce Porter's five forces model. [...]

[...] They might be included at different levels of analysis of an organization e.g. strategic, marketing, product development, etc. One of the extension of the PEST model is the PESTEL (Political, Economic, Social/demographic, Technological, Environmental,Legislation), which is a more complete analysis and help the company to design a better strategy, linked with the industry but also to the environment (political and economic factors). The company could also use the PRESTCOM analysis (Political, regulatory, Economic, Social, Technological, Competitive, Organizational and Market) which would give a more complete contribution, because it also analyses the competitors, the organization and the market. [...]

[...] Porter's five forces model is still a picture, more detailed than the SWOT, but nowadays, the market is evolving, changing, through innovations for example. This framework still is abstract and analytical; it's more an overall than a detailed analysis, because it simplified the micro economic theory in just five forces, five influences on the external environment of the company. It simplifies the value chain of the industry: for example, the could be divided in different segments: end customers, channels to be more complete. [...]