The Characteristics Of Michael Porter's Five Force Model

Decent Essays
They say that supply chains were organized as a series of individual enterprises connected through independent buying and selling transactions; bound by the geography of resources and the then available technologies. Use of resources and consumer patterns are some of the issues which drove the supply chain. Commodity chains were limited due to the not so developed technology and organizational development. Those responsible for managing businesses lacked the capability to coordinate operations. Vertical integration was the only alternative to the market. Formal management structures appeared in place of independent authority to plan and control derived through management hierarchy.
Today, the world faces fierce global competition exacerbated
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Michael Porter’s ‘Five force model’ will be used to assess barriers to developing supply chains and challenges encountered by managers during implementation and follow-up phases of every supply chain. The paper will also look into how inter-organizational relationships can reinforce supply chains leveraging on the use of cloud computing to maintain competitive advantage. Procter and Gamble’s strategy is used as one of the major examples of supply chain success.

The concept of the supply chain underscores the importance of operations as a benchmark to strategy. Supply chain is built on the framework of the “value chain” of Michael Porter. Porter (1985) defined the value chain as a set of activities that an organization carries out to create value for its customers. He divided the value chain into two:- primary activities and support activities; all pushing towards having a competitive advantage over other organizations. The value that’s created and captured by a company is the profit margin: Value Created and Captured - Cost of Creating that Value = Margin
The more value an enterprise creates, the more profitable it is likely to be. This is translated to competitive advantage when customers get more
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