The five competitive forces’ model is a framework for understanding the
structure of an industry and was developed by Harvard professor Michael
Porter. The Figure 19 illustrates how the framework is comprised of the forces
that determine industry profitability. From the threat of substitutes, the entry of
new competitors, rivalry among existing firms, the bargaining power of suppliers
and the bargaining power of buyers which all clarify the average rate of return
for the firms in an industry.(Barringer& Ireland 2006,p.78.)
The Five Forces help the business to understand the industry concept and especially
the effects of both Power and Threats in an industry through main subjects
(buyers, suppliers, etc).
The main goal of competitive strategy for a business is to determine the company’s
position in the industry where it can best protect itself from those competitive
forces or can influence it and the profit.
Furthermore, from the competitive strategy, Porter had analyzed about the
strategy target which called “Porter’s Generic Strategies” that shows how a
company/ business approaches their main consumer objects, the interaction
among cost, differentiation and the focus of the strategy. Figure 20 will detail the
Porter’s Three Generic Strategies.
The five competitive forces’ model is a framework for understanding thestructure of an industry and was developed by Harvard professor MichaelPorter. The Figure 19 illustrates how the framework is comprised of the forcesthat determine industry profitability. From the threat of substitutes, the entry ofnew competitors, rivalry among existing firms, the bargaining power of suppliersand the bargaining power of buyers which all clarify the average rate of returnfor the firms in an industry.(Barringer& Ireland 2006,p.78.)The Five Forces help the business to understand the industry concept and especiallythe effects of both Power and Threats in an industry through main subjects(buyers, suppliers, etc).The main goal of competitive strategy for a business is to determine the company’sposition in the industry where it can best protect itself from those competitiveforces or can influence it and the profit.Furthermore, from the competitive strategy, Porter had analyzed about thestrategy target which called “Porter’s Generic Strategies” that shows how acompany/ business approaches their main consumer objects, the interactionamong cost, differentiation and the focus of the strategy. Figure 20 will detail thePorter’s Three Generic Strategies.
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