Essay on Analysis Of Michael Porter 's Five Industry

1403 Words Oct 14th, 2014 6 Pages
Michael Porter’s five industry forces is a framework to analyze level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. This model originated from Michael E. Porter 's 1980 book "Competitive Strategy: Techniques for Analyzing Industries and Competitors." Since then, it has become a frequently used tool for analyzing a company 's industry structure and its corporate strategy. Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These includes intensity of competitive rivalry ,threat of new entrants, threat of substitute products or services, bargaining power of customers (buyers) and bargaining power of suppliers

Firstly, for most industries the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Michael Porter states that rivalry in an industry occurs one or more competitors is influenced by the competition pressure and either feels the impact or sees a good opportunity to improve the position in the market. In most cases, organizations in the same industry are mutually dependent on each other, which means that any tactic that one of the competitors applies may have some significant impact on the close competitors in the same industry and market. Therefore, an action by one of the…

Related Documents