Michael Poters Frame Work

Porter’s Five Forces (1980), named after Michael E. Porter, is a critical framework to access the level of risk and degree of potential profitability of each industry in which firms are competing. Specifically, five forces are shown in Figure 1, are includes competition between rivalry, potential of new entrant, threat of substitute products, and pressure on bargaining power of suppliers and customers.

The five forces of rivalry is an efficient method that companies apply to facilitate their ventures to locate most valuable industry for its business. These five forces

Competitive Rivalry As you study the model, you will see that the rivalry is the component that all the competition and their threats centers around. Please describe this for Company G.

The Intensity of Rivalry among Competitors in an Industry (High): Equally balanced competitors exist within the industry such as BCF and KMD; these firms also face competition from retailers and wholesalers. The growth of the industry is relatively agile in both financial and technological aspects. The intensity or rivalry is further accentuated by relatively high storage and fixed rental costs, extensive product differentiation and minimal switching costs.

Businesses are not only faced with competition within the industry they operate in. They also face competition from businesses in other industries.

In general, the level of competition in an industry increases with the number of firms in the industry. If all firms in an industry are small in size, relative to the size of the industry, it is a fragmented industry. If a small number of firms controls a large share of the industry’s output or sales, it is a consolidated industry.

Competition being one of the major issues that often must be addressed in the business world, it is important for a firm to learn on ways to reduce the impact of the competition. Competition is definitely an important factor in helping a business

In his article “The five competitive forces that shape strategy“, Michael Porter (2008) updates and extends his “five forces” framework he first introduced in 1979 and which has influenced the academic and business research for decades. He reaffirms that “THREAT OF ENTRY”, “THE POWER OF SUPPLIERS”, “THE POWER OF BUYERS”, THE THREAT OF SUBSTITUTES”, and “RIVALRY AMONG EXISTING COMPETITORS” are the forces that shape every single industry, and a thorough understanding of such forces help analyze everything from the intensity of competition to the profitability and attractiveness of any industry. The framework has two dimensions; the vertical dimension that connects

Existing Competitors. Rivalry among competitors within an industry use price discounting, new products, marketing, and other techniques to be competitive. Profitability of an industry suffers from high rivalry. The intensity with which companies compete and the basis on which they compete determine to which degree rivalry brings down an industry’s profitability (Porter, 2008). Pure competition is considered by economists as a competition with a high

Competitive rivalry force used to examine how intense the competition of the company currently in the marketplace. When the competitive rivalry is high, it means that there are few businesses are provided the same or equally

Companies have to strife for a competitive advantage over its rivals. Industry concentration is measured through concentration ratios. A higher concentration

Competitive rivalry is the consequence of the interaction of structural factors. Rivalry between the existing competitors has the character of the race for the position by using different tactics such as the

Porter's Five Forces can be applied to particular companies, market segments and industries with the step-by-step analysis of market structure and competitive situation. First of all, when implementing this module in organizations, it is necessary to determine the scope of the market to be analyzed. Following, all relevant forces for this market analyzed and key forces are identified (Gerry and Kevan, P.117). Actually some organizational strategy and the longer-term goals are mainly based on or consistent with the key forces. Hence, it is not necessary to analyze all elements of all competitive forces with the same depth. Moreover, the key forces in the competitive environment will vary in different industry. Different forces take on prominence in shaping competition in each industry (Porter,

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.

➢ Fixed costs - with high fixed costs as a percentage of total cost, companies must sell more products to cover those costs, increasing market competition.