1)With Reference To Your Own Organisation, Explain How

Porter’s Five Forces is a framework that consists of five competitive forces, threat of entry, power of supplier and buyer, threat of substitution and competitive rivalry. These forces facilitate the analysis of the task environment of an industry or company (Wheelen and Hunger, 2009).

Porter's Five Forces is a simple but powerful tool that consist of 5 different forces to understand the competitiveness of your business environment, and for identifying your strategy's potential profitability. The five forces are degree of rivalry, threat of entry, threat of substitutions, buyer power, and supplier power. Each force is helpful in their own way to get to know your rivals a lot better and get to know what can happen in your market.

Threat of new entrants is relatively high. Companies forming alliances are potential rivals. Even if earlier such company was not considered to be a threat, after merging with some research and development company or forming alliance with another pharmaceutical company it would become a rival to Eli Lilly. The threat is however weakened by significant research and development costs necessary to successfully enter the business. Eli Lilly’s focus on a relatively narrow market of sedatives and antidepressants weakens the threat of new entrants, but other products that form lesser part of company’s sales such as insulin and others are exposed to high threat of new

Porter’s five forces model describes 5 components. Buyer power, supplier power, threat of substitute products or services, threat of new entrants and rivalry among existing competitors. Using this scenario, I will explain every of these components.

We chose the Porter’s Five Forces as a valuable analysis tool as it helped us to identify the potential threats from new entrants as well as the power that the buyers have over the sales in this industry. It also helped us to identify the amount of competitiveness within the industry and how easily other products could be substituted for our products.

Application of Porter’s five forces analysis focuses on industry and market analysis, measuring key elements of a relevant market environment and ultimately how healthy that market looks for a business. These key forces include buyer power, supplier power, threat of new competitors, threat of substitution, and existing competition. Where competition is fierce, market size low, supply chain weak, competition aggressive and plentiful, pricing and margins low, it’s likely this market would be considered unhealthy for a company to enter. The fewer or lesser such items, the healthier a market might be and more likely to be considered by a company.

Porter’s five forces is based on five different forces related to the internal and external environment of the company that further help the management of the company to formulate their work strategy to maintain their competitive advantage over other company working in the same sector (Wright, et al., 2013).

Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are:

Porter's five forces is a model introduced in 1979 by Michael Porter and used by companies for industry analysis and corporate strategy development. The five forces include competition, supplier strength, customer power, the potential for new companies joining the industry, and the threat of substitute products.

Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation”.

Porter developed and introduced five forces, namely, "Threat of New Entrants, Threat of Substitute Products or Services, Rivalry among Existing Competitors, Bargaining Power of Suppliers, and Bargaining Power of Buyers." He stated that, in any industry, if these forces are strong, the overall attractiveness of the industry will be low and if they were weak, companies in that industry would be profitable.

A competitive strategy must meet the opportunities and threats inherent in the external environment; it should be based on an understanding of industry and economic change.

The Five Forces Analysis was created by Harvard Professor Michael Porter in 1979 and it provides a framework for industry analysis and business development. Porter proposes there to be five forces which either inhibit or prohibit a company’s ability to succeed in a given market.

The Five Forces Model helps determine the relative attractiveness of an industry and includes: Buyer Power, Supplier Power, and Threat of substitute products or services, Treat of new entrants, and Rivalry among existing competitors.

5 forces analysis definition: This model identifies and analyzes 5 competitive forces that shape every industry, and helps determine and industry’s weaknesses and strengths.