Assgmnt2:Porters 5 Forces Model

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Porter’s 5 forces model is one of the most recognized framework for the analysis of business strategy. Professor Micheal Porter is the guru of modern day business strategy. He has identified five forces that determine the state of competitiveness in a market. This five force are summarized in the above diagram. The fifth force is the degree of rivalry that currently exist among firms already in the industry. Here are a few additional details about porter's model.

• Low Bargaining Power of Suppliers: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.This force do not have much experience with online price/product promotions. You need to face to face with the suppliers to get the raw material.

• Medium Bargaining Power of Buyers: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you. This force you can usually see at the market when the customers bargaining for the price of product. Using this methods , the owner and the customers can communicate

• High Rivalry among Existing Competitors: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.High competitors does mean you will faced a huge problems. Because you will become more strengthen to compete with others.

• High Threat of Substitutes: This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.

• Low Threat of New Entrants: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it. 

In a conclusion, this 5 forces model is the best and an important for the business. 
you can refer to this link to get more information about the Portes 5 Forces Model:
http://www.businessballs.com/portersfiveforcesofcompetition.htm

 

     Michael E. Porter 

 the Bishop William Lawrence University Professor at Harvard Business School,

one of the most influential management thinkers of his generation. Porter is considered by many to be the father of modern corporate strategy.Porter’s Five Forces Framework is taught in every business school in the world. http://www.thinkers50.com/mobile/biographies/3