Porter Five Forces

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1.0 INTRODUCTION In today 's dynamic and competitive business environment, survival, growth and profitability are the essence goals of all industries. Nowadays, Porter 's Five Forces model is currently being adopted as the powerful management tool of choice by many organizations. The essence of this model is that it can help senior managers to make right decision and build and sustain competitive advantages in the organization level. This document presents the overview approach of Porter¡¦s five forces framework across organizations. And critically evaluation of porter¡¦s five forces model mainly focused on identifying the benefits and limitations of it and exploring some perceived issues or problems regarding implementation. Finally the…show more content…
The following factors tend to raise barriers to market entry by new entrants: „« Economies of scales. „« Differentiation (brands loyalty). „« Capital requirements. „« Switching cost. „« Access to distribution. „« Government¡¦s policy. „« Unique technology (Porter, Michael E., Competitive Strategy). 2.1.4 Threat of Substitutes Products from one business can be replaced by products from another. If company produce a commodity product that is undifferentiated, customers can easily switch away from its product to a competitor¡¦s product with few consequences. In contrast, there may be a distinct penalty for switching if company¡¦s product is unique or essential for its customer¡¦s business. Substitute products are those that can fulfil a similar need to the one current product fills with lower price or/ and better services (Porter, Michael E., Competitive Strategy). Substitutes are a greater threat when: „« Product doesn¡¦t offer any real benefit compared to other products. „« It is easy for customers to switch. A grocer can easily switch from paper to plastic bags for its customers, but a bottler may have to reconfigure its equipment and retrain its workers if it switches from aluminium cans to plastic bottles. „« Customers have little loyalty. When price is the customer¡¦s

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