What is the relevance of Michael Porter's 5 forces to modern day business? Give examples and show current reading to support your proposition

Résumé du document

Born in 1947, Michael Porter was a professor of corporate strategy in Harvard University. Well-known for his researches on how firms could obtain a competitive advantage; he is behind the notion of the five forces model. Established in 1979, Michael Porter's five forces concern the five factors which have an influence on firms' performance. At that time, this model was quite interesting because it was really close to the business reality. Thus, Michael Porter's lowest force represented the competitive advantage of the firm. The problem which is raised here is, what is the relevance of Michael Porter's five forces to modern day business? Is Michael Porter's five forces model still pertinent in our business today? Today, we are aware that business is really sensible and is declining steadily, especially in France. Every day, when we switch on the television, or read the newspapers, we learn that modern business is very threatened. We are witnesses to big companies which lay off employees, or are off shoring, and specially now, we see financial companies such as banks, going bankrupt. Business in the whole world is in really bad conditions and governments are trying to face this huge crisis.

Extraits

[...] But is Michael Porter's model enough to study a market or an industry? Should we have to rely just on Michael Porter's model to study an industry or should we have to use many methods? In order to succeed to answer to these questions, we are going to apply Michael Porter's five forces model to a current market and a specific one: the luxury market. So, the question that we want to ask ourselves is: Is luxury a strategic business today? [...]

[...] Bibliography Books Global Strategy by Mike. W. Peng Choix stratégique et concurrence by M. Porter Competitive Strategy by M. Porter Review Harvard Business Review The five competitive forces that shape strategy” by M. Porter Thesis What is luxury today? [...]

[...] Questions rose for this force is: Are the buyers in strength position? Are there many suppliers or is there just one monopoly? The bargaining power's force is really strong when it is high because suppliers could have a strong impact on firms. For example, in the PC industry, there are big suppliers: Microsoft for the operating systems and Intel for the microprocessors which have the monopoly. So, as every computer has those systems in order to work, every firm like Sony, Dell, Toshiba are relying on them. [...]

[...] The six forces model can be an extension of Porter's Five Forces Model and is more complete than the former one. But, in order to have a better view of the profitability of an industry or a market today, we need to complete Michael Porter's Five Forces with other current models. If we want to understand the profitability of a sector or an industry, we have to make an internal and external analysis of the environment in order to find our strategic way and to know what our competitive advantage on the other firms of the sector is. [...]

[...] Porter) So a strong competitive force can be seen as a threat because it will be more difficult to have profit and a weak competitive force can be seen as an opportunity for firms to earn profit. The essential point is to organize into a hierarchy these forces in order to determine what the key success factors in this industry are. The threat of new entrants Concerning the threat of new entrants, it is the threat of the possibility entry of new competitors in the industry. [...]