Porter's Five Forces Model and Modern Applicability

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Porter 's Five-force Model and it 's continued validity as a strategic management tool Porter 's Five-force model is a theoretical guide to understanding the pressures that are felt by an industry, and by analogy, on a company. It can be used in such a way as to allow “the strategic business manager seeking to develop an edge over rival firms … to better understand the industry context in which the firm operates” (Porter, 1999). The key to any successful (e.g. profitable) business venture is an understanding of the differentiating factors that contribute to a higher-profit, lower-cost operation. Porter 's model, while helpful, is not flawless, and is not able to escape the need for modern interpretation. However, with inclusion of…show more content…
Today, information on substitute products or new organizations entering the market can be had in a fraction of the time it took in 1980. The differences in costs of goods and materials can be obtained from websites and digital RSS feeds at a moment 's notice. Supplier and buyer needs and price constraints can be categorized and filtered to meet the specific research needs of an organization 's strategists and any changes in information update in the blink of an eye. The strategist of today needs information faster and more completely than ever before and is under increased pressure to react and act quickly to maintain profit, product or service availability, and viability in any market. Dagmar Recklies in her 2001 article “Beyond Porter – A Critique of the Critique of Porter” refers to the work of Larry Downes in his article “Beyond Porter” by stating that Mr. Downes “identifies three new forces that require a new strategic framework, and a set of very different analytic and business design tools : digitalization, globalization, and deregulation.” Digitalization is described by stating “as power of information technology grows, all players in a market will have access to far more information” and “new business models will emerge in which players from outside the industry are able to vastly change the basis of competition in a market” (Recklies, 2001). Globalization can be explained by observing the relative ease of communication and distribution

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