The Five Competitive Forces That Shape Strategy Analysis

Central Theme Michael E. Porter’s main lesson in “The Five Competitive Forces That Shape Strategy,” is to help companies be profitable, understand their industry, detect threats, and have a vital strategy by using the five competitive forces based on their industry. What the author is teaching us is to be prepared to be competitive in the industry with other like companies by being informed with the five forces and using them to their full potential to form and shape the company’s framework. One has to become a strategist and display the forces to be suitable for the company. Not only is the author trying to show companies how to recognize and use the five forces, but he is also trying to make them understand why they are in the position …show more content…
The company will know about the threats early on and will be able to handle such threats and even impede or at least restrain them. It will also allow for the company to keep new entrants as threats or nothing at all than for them to actually become competition. By doing so, the company will make the entry barriers high, thus making it harder for new entrants to come forth. The threat of substitute products or services can affect a company if there is no strategy implemented. The company will know what to do with their product or service to keep their customers than to lose them to the opponents. By using Porter’s five competitive forces, a company will acknowledge who their rivalry is among existing competitors. They will understand that if their profitability is low, it could be because of high rivalry within the industry. Then they will form a strategy on how to fix that issue and make themselves have the bargaining power in the …show more content…
The power of suppliers have high revenues because most don’t stick to one industry, so industries have to be careful since they share their suppliers. With that in mind, suppliers can easily receive higher profits from the industries they are partnered with. The company has to be careful and know how to communicate with their suppliers, especially if there is no good substitute or if the company is reaching high revenue making the supplier want to enter in on the competition. The bargaining power of buyers would be somewhat like the bargaining power of suppliers, where the company has to be careful because of negotiation leverage as mentioned by Porter. The buyers can have the opportunity to buy an alternate product for example, thus putting the first company in a predicament. However, since the company has made a comprehensive analysis on their industry, they will know what to implement in their own product or what to change to get those buyers