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

Résumé du document

Porter's 5 forces analysis is a tool of strategic analysis of the competitive environment of a firm. Porter's 5 forces determine the competitive intensity and therefore attractiveness of a market. Indeed, the main objective of a company is to acquire a competitive advantage on its market. The weight of these five strengths allows the determining of the capacity of firms to realize a profit. If all the strengths are raised the possible profit will be limited. On the contrary, if the strengths are weakened, it is in theory possible to realize an important profit. Porter's analysis allows analyzing the situation of competition. This analysis is similar to other methods such as the analysis PEST but concentrates on a single DAS rather than on a product or a range of product. I have decided to take various examples such as the wine industry, and broadcasting (telecommunication, television) in order to illustrate my report. In the first part, I will try to give a definition of the term strategy and describe Porter's 5 forces. Secondly I will present Porter's 5 forces in current businesses, and in the last part a critique of Porter's 5 forces will be explain.

Extraits

[...] Porter argues that organizations need to give special consideration to the nature of a particular industry in determining new areas in which to do business and in formulating strategies. The greater the competitive forces, the greater the threat that the organization's strategic goals may not be reached because of reduced profit potential. On the other hand, the weaker the competitive forces, the greater the opportunities for operating successfully. Hence, in an analysis of potential environmental threats and opportunities, the competitive forces model is a particularly useful tool. [...]

[...] What is the relevance of Michael Porter's five forces to modern day business? Give examples and show current reading to support you proposition Introduction Strategy and description of Michael Porter's 5 forces Michael Porter's 5 forces in modern day business Critique of Porter's 5 forces Conclusion Recommendations Bibliography Executive Summary This report is an analysis of Porter's forces and more precisely a study of Porter's forces in the current economy. Thanks to this report we'll know what Porter's forces are and how Porter's forces interfere in current economy. [...]

[...] Strengths of a company are important because they are potential sources of competitive advantage. A strength that is unique and that competitors cannot easily match or imitate is known as a distinctive competence. Description of Michael Porter's 5 forces Michael Porter is a professor at Harvard Business School and is a leading authority on competitive strategy and international competitiveness. Michael Porter was born in Ann Arbor, Michigan. “Professor Porter's core field is competitive strategy, which remains a major focus of his research. [...]

[...] For instance, satellite operators and TV cable are now competing for buyers. Internet is now a way for inexpensive voice calls (program such as Skype, Msn, and Facebook ) and this is a threat to telecom companies' voice revenues. Moreover, availability of substitutes limits the prices that can be charged. For example, artificial sweeteners can be substituted for sugar, electricity can often be substituted for gas in producing energy, and wallpaper can be substituted for paint as an indoor wall covering. [...]

[...] Therefore, because of specialized equipment needed and plus the low profits, this industry suffers from elevated exit barriers. This industry is a very competitive environment and the main competitors are very large in terms of product distribution, advantages and brand name identification. The competition is quite severe inside this industry and the providers principal efforts are centered on reducing cost in order to propose the lowest priced service. The long-distance telecommunications market is changing and companies will be opened to further competition. [...]