Michael Porter Five Forces Analysis

4508 Words 19 Pages
Register to read the introduction… 2.1 Porter’s Five Competitive Force Model
Michael Porter (1980) provide framework for understand the relationship between a firm’s uses of IT and the nature of that firm output. He proposes a five-force model for business competition strategies: (1) bargaining power of buyers, (2) bargaining power of suppliers, (3), threat of new entrants (4) threat of substitute products or services and (5) rivalry among existing competitors. The following is a brief description of these five forces and their connections with the possibility of new entry.

(1) “Bargaining Power of Buyers” refer to ability for customer to demand lower price, reduce product delivery cycle time, expectation for higher quality and efficient and effective services. Porter identified 7 factors, which suggested that buyers are powerful whenever there are many alternative available and low entries for new products. On the contrary, buyers are weak when higher entry barrier, which may result in higher concentration of market (Porter,
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Lee & Vonortas (2002) supported this theory that alliance strategy with vague goals to define the collaboration structure for present or future needs, market position and technologies capabilities whether it is for short or long-term contract.

This paper will highlight two successful story of corporation adopting alliance strategy to gain experience, increase market share and profitability.

 Cisco Systems Inc and BearingPoint alliance for streamlined business consulting and network solutions that help improve productivity, reduce costs, secure assets and promote better connectivity to their customers and partners and exploit new technologies to enable business faster return on investment. In this collaboration, Cisco Systems Inc invested a $1 billion (19.9%) ownership of BearingPoint. In return, BearingPoint will increase skilled IT human resources to deliver Cisco solutions to clients, to develop new solutions, customizing and demonstration of solution to clients and provide customer service support for Cisco’s growing Service Provider market (, viewed June

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