Michael Porter's Five Forces Analysis Of An Industry

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Register to read the introduction… A good example of this would be in the industry of household video game consoles. Nationally, there are only a few suppliers in this industry, such as Microsoft, Nintendo, and Sony, yet there are many video game stores locally such as Toys n Joys, Software Etc., K*B Toys, Wal Mart, K Mart, Sam Goody, Costco, Sam’s Club, Blockbuster, and many other smaller businesses. If one were to look around nationally, it would be apparent that the local market here in Hawaii is a mere fraction of the market as a …show more content…
DEGREE OF RIVALRY Degree of rivalry or the intensity of competition is the final force of Michael Porter's Five-force theory. This point is crucial in evaluating possible entry into various industries. Favorable competition levels of an independent entrepreneur depend greatly on personal strategy and desired outcome.
Examples of industries with low-level competition include monopolies or near monopolies such as public utilities. Companies such as Hawaiian Electric and Board of Water Supply are the industry when it comes to public utilities. Although federal restrictions somewhat regulate these "monopolies", their low degree market sharing provides them very healthy profit margins. On the other hand a high level of competition creates price wars and market sharing. These conditions cause profit sharing among the rivals in a particular industry and higher savings for consumers. A prime example of this high degree of competition is the current computer industry. Although the computer market, at its pioneering stages, was categorized as an industry with fairly low competition, the advancement of modern technology has pushed the industry to new frontiers. In these recent years many companies have dove headfirst into the computer industry, creating an unbelievably high level of
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However, there are other things Porter has developed that complement the use of his five-force analysis. One of these tools would be Porter’s Diamond Of national Advantage. In short, this tool is used to analyze a country’s ability to develop an advantage in the international trade market through means other than their global position, and resources found there. Another strategy that Porter had developed is his ‘Generic Strategies’. These strategies are used to determine what type of approach a company should take to optimize its position in their industry, and to ultimately maximize the profits they are able to

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