5 Forces Porter

To perform the Industry Analysis it is better to follow Michael Porter's five forces model. This analysis framework was

created so that it helps managers in their task to analyze competitive forces to the company. (Hill & Jones 80) This

model is only one of the models that can be used for this task but it is one of the more popular models. The five forces

that we will have to look at for this model are (1) the risk of new and potential competitors; (2) the bargaining power

of suppliers; (3) the threat of substitute products; (4) the bargaining power of buyers; and (5) the degree of rivalry

among established companies within an industry. (Hill & Jones 80)

The first force in Porter's Five Forces Model is Entry Barriers. These factors are those that make it harder or easier for

another company to enter into the industry. High barriers to entry will keep potential competitors out of the industry

and low barriers to entry will give an opening for competitors to enter into the industry if the industry

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returns are high enough. (Hill & Jones 82) The fewer competitors in an industry the more the existing companies can

take advantage of higher prices and better returns.

...

Hewlett Packard and Compaq, revenues have increased by 107% and 714% respectfully over the past ten years. When

IBM and Apple were the only computer systems to choose from people had to make a choice. Depending on the

program and the equipment in use, word processors can display documents either in text mode using highlighting,

underlining, and color to represent italics, or boldfacing and other such formatting. There have been several

companies that have entered the notebook computer business by offering custom-built computers over the Internet.

(Hill & Jones 207) This in turn caused IBM to loose their advantage over new competitors. The forms exchange

service translates web data into standard EDI format and transfers these messages to and from IBM Information

Exchange mailbox. These companies...

5 Forces Of Porter
INTRODUCTION
An industry is a group of firms whose products are close substitutes for each other (e.g. the car industry, the travel
industry).
Some industries are more profitable than others. Why? The answer lies in understanding the dynamics of competitive
structure in an industry.
The external environment of an organization is marked by intense competition between rival firms. The components
of external environment include economic, socio-cultural, and global issues. In order to gain sustainable competitive
advantage, the organization needs to study its external environment and exploit the opportunities prevailing therein.

The most influential analytical model for assessing the nature of competition in an industry is Michael Porter's Five
Forces Model, which is described below:

Michael Porter described a concept that has become known as the "five forces model" to help understand how
competition affects your business. Porter's 5 forces analysis is a framework