Porter 's Five Forces Framework Essay

Porter’s 5-Forces Model: A method for examining the competitive environment for a company or industry. It specifies and evaluates threats from new entrants, suppliers, buyers, and substitutes in the arena of competition.

Porter’s Five Forces can be used to analyze the carbonated soft drink industry in the United States. The first force is the threat of new entrants. Essentially, this is an analysis of the level of difficulty and number of challenges for new businesses to enter the market. The second force is the threat of substitutes. This is a detailed description of potential substitutes for the products in the industry. The third force is the bargaining power of suppliers. This analysis shows the amount of power that suppliers have over the businesses in the industry. The fourth force is the bargaining power of buyers. This is a summary of the negotiating power of the buyers, and the power they have over the business. The final force is the level of rivalry among the competitors. This is a measure of the intensity of the rivalry between all competitors in the industry. Each of these factors influence the industry. Assessing each force will help a business develop a successful business strategy.

Competition in a technology market represents that two or more technology companies, firms compete there, in the same business area. When a company decides to enter a new market and to continue own business there, then one of the most important things is that, regard to the competition. The main characteristics for determining the competition are:

Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]

Rivalry among existing competitors takes on many forms, including price discounting, new product introductions, advertising campaigns, and service improvements (Porter, 2008). The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other’s profit potential. If rivalry

According to Ormanidhi & Stringa (2008), how firms compete and what strategies they choose are imperative questions for companies in every sector of the business world. Their writings state that improved understanding of a firm’s competitiveness would serve as input to improve policies concerning competition and related issues; and improved policies, will provide valuable support to efforts to continuously develop markets and businesses. Within, the author’s place significant emphasis on the concept of competition with echoes from Porter’s five forces model (see Appendix 6). The model illustrates the five forces, which hinge on the determinants of the industry’s overall competitiveness and profitability, which are: threat of new entry, intensity of rivalry among existing firms, pressure from substitute products, bargaining power of buyers, and bargaining power of suppliers.

Porter 's Five Forces Model is a critical instrument to break down an outer aggressive environment of the business. The model incorporates threat of entry, the threat of rivalry, the threat of suppliers, the threat of purchasers and threat of substitutes.

Porter's 5 forces is frequently an individual group of very effortless product that can help recognizing the spot that the corporation power conditional on a corporation situation. These types of pressure helping the firm to understand the potency of a completive position.

This paper addresses the use of Porter’s Five Forces model and how it can benefit Broadway Cafe by identifying and analyzing the effect of these forces on its business. The benefits include improved decision making, faster time to market, better productivity, improved competitive advantage, more profits and greater customer satisfaction. It also helps in achieving operational excellence.

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.

According to Michael Porter, “Every industry has an underlying structure, or a set of fundamental economic and technical characteristics, that give rise to these competitive forces” (Porter 1998:23). The forces mentioned above are: industry rivalry, threat of new entrants, threat of substitute products, bargaining power of suppliers and bargaining power of buyers. Additionally, Porter mentioned that: “Knowledge of these underlying sources of competitive pressure provides the groundwork for a strategic agenda or action” (Porter 1998:22).

Porter 's Five Forces model (PFF) is a powerful instrument that can be utilized by companies to investigate its situation and identify its industry 's competitors. Analyzing industry will help any business in determining the competitive strength and weaknesses. By using PFF model, investors can gain valuable information regarding what the actual factors that affect the organization 's profitability (Evans & Neu 2008). This paper will analyze the Cola Wars case study based on the PFF model, and the primary components of soft drink industry. At the end of this paper, some recommendations will be given to Coca-Cola company to enhance its position in the market.

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.

Porter’s Five Forces model is used to evaluate the degree of rivalry between competitors in a given industry through assessing the four forces that lead to this outcome. These forces are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products.