Porter's Five Forces Model for Industry Analysis

3909 WordsMar 13, 201316 Pages
This essay is an attempt to apply the Five Forces Model for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979 that draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Within the ambit of Porter’s typology, this essay aims to analyze the attractiveness of industries for investment and seeks to identify their potential for change or adaptability within the context of the inherent constraints and opportunities which exist in any given organizational environment. To achieve the above, a thorough introductory outline of the Five Forces Model will be laid out, citing its content…show more content…
For example, dictatorships can be very unpredictable and civil wars may flare up and this may reap havoc in business. According to anecdotal evidence, a case in point is the Libyan conflict which saw Lapgreen, a Libyan company that had taken over the Zambian telecommunications company Zamtel under MMD rule; lose its stake in the firm as a result of regime changes in both countries. Legislation also affects the trading activities of many businesses. Laws on business operating hours, minimum wages, intellectual property, consumer privacy, company ownership and registration, etcetera, have repercussions on the functions of the organization. Lastly, ethics reflect a code of behavior expected of organizations and their leadership by the public. In recent times, pressure groups advancing various interests such as environmental protection, consumer protection, and other themes have increasingly become active players within the business arena. Therefore, monitoring the activities of pressure groups is one way in which organizations are able to predict future legal constraints that are usually promoted by groups with popular support. Economic factors affect the financial operations of organizations such as the potential for growth or for retrenchment in the economy at large in relation to the market for the organization’s products. Factors such as global economic trends, local inflation, income levels,
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