Five Forces Of Performance Management

The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition. The most valuable contribution of Porter's “five forces” framework in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine industry attractiveness.

Porters Five Forces of Competition framework views the profitability of an industry as determined by the five forces of competitive pressure. As described below, only high competitive rivalry detracts from the attractiveness of the health insurance industry for firms currently in the business.

Porter’s five forces analysis is the structure that provides evaluating and analyzing the level of competition among industries and initiate strategy improvement to them. The five forces are as follows:

Michael Porter formed a basis that consists of five forces of competition. These five forces are meant to be a framework for diagnosing industry structure. Essentially, the idea is to explain the sustainability of profits against bargaining, and direct and indirect competition. The five forces that shape the strategy are,

Porter (2008) argues that the threat of entry “puts a cap on the profit potential of an industry … [and] incumbents must hold down their prices or boost investment to deter new competitors” (p. 81).

The next section pertains the theoretical concepts and concerns about performance management. Its definition, essences and principles also purposes.

With the aid of the Five Forces Framework, we understand how the structure of the industry drives the competition and determines the profitability, the position of the firm in relation to its rivals and how to restructure the industry for the better. However it has its disadvantage as the study of this wide range of external factors may not be cost effective and may create information overload.

The Porter’s five forces is a competitive position analysis and business strategy format created by Michael Porter in 1979. The premise behind the format is to provide them with five forces that shape every industry. Mr. Porter 's theory is that if a company analyzed the information received from reviewing the five forces, the company would be able to compete in a higher fashion against its competitions. Following the five forces would allow a firm to determine the type of market or industry it is operating in. Each of the five works as an individual factor in the microenvironment, but one force could not exist without the out force in a stable economy. The five forces are Supplier Power, Buyer Power, Threat of substitutes, the threat of new entrant and Competitive Rivalry. Three forces affected the market horizontally while two affected, it vertically from each side. A review of the movie rental market from the Porter’s five forces.

2. 3. 4. 5. Threat of New Entrants (or barriers to entry) Supplier Power Threat of Product Substitutes Buyer Power Intensity of Rivalry

Due to the high returns, profitable markets will always attract new firms. This results in potential of new entrants, which eventually will decrease profitability for all firms within the industry. Usually, barriers to entry factors consist are shaped by governmental policies, capital requirements, patents, cost disadvantages, independent of size, economies of scale, economies of product differences, product differentiation, switching

The Porter’s 5 force analysis creates a framework for diagnosing various industrial components that are built around five major competitive forces that decrease long-term industry average profitability. The identified industry structure framework can be applied at the level of the industry, the strategic group (or group of firms with similar strategies) or even the individual firm. The ultimate purpose of the analysis is to create insight on continuity of profits bargaining and against direct and indirect competition.

According to Porter, the nature of competition in any industry is handled by the following five forces:

Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the

Porter’s five forces are used to determine the competitive intensity and attractiveness of a market. These are close forces that affect a company’s ability to make a profit and serve customers. If any of these forces change, a company must reassess its marketplace. The five forces include: the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers and the bargaining power of suppliers.

The Porter’s 5 Force Model identifies the relative strengths of five competitive forces on the