Use Of External Environment For Construct Strategies By Using Porter Five Forces Framework

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Introduction Nowadays, due to dynamic change and highly competition in business environment, firms need to adapt themselves in order to cope with this situation. Strategies are key instruments that can make firms pass through these obstacles. In order to create strategies, firms need to have a clear goal and analyze both internal and external environment. In this essay, it will show how to use external environment to construct strategies by using Porter five forces framework to analyze attractiveness of the industry, and discuss the usefulness and its limitation. The essay will start with the concept of strategy and concept of Porter’s five forces framework. Then, it will examine each components of the framework and how it works. Lastly, the essay will critically discuss about benefits and limitations of using this model to analyze industry. Concept of strategy Strategy can be defined in various way by different experts in several field of studies. As stated by Grant and Jordan (2003), strategy is an instrument that allow person or operations to achieve their goals. Moreover, Mintzberg (1978, p. 935) defined that as “a pattern in a stream of decision”. Although it has a several meaning, the key concept of strategy which define by several experts shared the same point of view as tools whereby the firm or person used to fulfill their purposes. In order to create effective strategies to compete in dynamic turbulence environments and highly competitive markets,

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