The Nature Of An Industry 's Competitiveness And Develop Corporate Strategies

1776 WordsNov 30, 20148 Pages
Summary The five forces model was developed by Michael E. Porter to help companies assess the nature of an industry’s competitiveness and develop corporate strategies accordingly. Michael Porter’s five forces model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should be based on an understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Porter’s Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry. This paper will analyze Porter’s five competitive forces model and will apply the concept to discuss and structure a new office of Travel service sponsored by Expidia.com. Introduction The Five Forces were Porter’s conclusions on the reasons for differing levels of competition, and hence profitability, in differing industries. They are empirically derived, i.e. by observation of real companies in real markets, rather than the result of
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