波特五力分析模型.doc

Porter 5 forces modelWhat is Porter 5 forces model?Porters 5 forces model of competitive analysis is a widely used approach for developing strategies in many industries. The intensity of competition among firms varies widely across industries.1. Rivalry among competing firmsThe intensity of rivalry is influenced by the following industry characteristics:1. A larger number of firms2. Slow market growth3. High fixed costs4. High storage costs or highly perishable products5. Low switching costs6. Low levels of product differentiation7. Strategic stakes are high8. High exit barriers2. Potential entry of new competitorsA profitable industry will attract other firms into the industry. A new entrant to an industry can raise the level of competition and substantially erode the existing firms market share position, thereby reducing the attractiveness of the industry.3. Potential development of substitute productsProducts from one business can be replaced by products from another. In general, product substitutes present a strong threat to a firm when the customers can obtain a product which is almost of the same quality or can perform similar or the same functions as a product the industry produces and at a lower price.Examples are plastic container products competing with glass and paperboard producers, and leather shoe manufacturers competing with other manufacturers of wallet and clothing. The presence of substitute products puts a ceiling on the price that can be charged before consumers will switch to the substitute product. Price ceilings equate to profit ceilings and more intense competition among rivals.4. Bargaining power of suppliersFirms may pursue a backward integration strategy to gain control or ownership of suppliers. This strategy is especially effective when suppliers are unreliable, too costly, or not capable of meeting a firms needs on a consistent basis. Firms generally can negotiate more favorable terms with suppliers when backward integration is a commonly used strategy among rival firms in an industry.5. Bargaining power of consumersFor example a customer wants to buy a product only when the supplier would give discount. If the supplier is not ready to provide any discount and is ready to close the deal by exiting, then the customer should understand that the product is actually worth.WeaknessPorters five forces model is a useful framework for competitive analysis within an industry. This competitive analysis of new entrants, substitutes, buyer or customer power, supplier power and competitors leads into strategic planning and the development of a tailored competitive strategy that expects to exploit the situation. However, the 5 forces model has a number of weaknesses and these need to be compensated for in order to complete a full competitive analysis.Weakness of Industry Sector AnalysisAccording to Porter the 5 forces model is intended for an industry level analysis and it is not intended to be used for an analysis of an industry sector. For example, pharmaceuticals may be considered one industry and bio-technology another but they both belong to the Life Sciences industry sector. The suggestion is to decompose the industry sector into component industries and then apply the five forces model. Whilst this approach will offer competitive insights it may miss the emergent properties of the sector i.e. the whole may be greater than the sum of the parts.Weakness of Conglomerate or Multi-Industry Company AnalysisIn addition to industry sector analysis those companies that compete in multiple industries as a conglomerate or multi-industry company such as Berkshire Hathaway, Mitsubishi or GE also present a similar challenge. For these diversified companies the proposed solution is the same again do the competitive analysis by industry.Competitive ForcesThere is a broad assumption of perfect competition within an industry and this is not always true as some companies have been identified in price fixing scandals for example British Airways has denied ripping off passengers after being fined a total of 271m over price-fixing scandal involving Virgin Atlantic. as Sky News reported 28Aug07 in BA Fined 271m Over Price-Fixing Scandal. Of course some price fixing cartels are normal practice such OPEC Organization of the Petroleum Exporting Countries and whilst some oil exporting countries such as Saudi Arabia are within the cartel others like Russia are outside of it. Companies may also enter into alliances as either a self-protection mechanism or as an aggressive move to eliminate competition. These “other” competitive forces introduce a further dimension to competitive analysis.Profitable IndustriesThe competitive analysis is intended to identify the competitive intensity and therefore the attractiveness profitability of an industry. However, there may be significant uncertainty that renders such expectations meaningless. That uncertainty might be driven by temporary macro economic conditions for example the price of oil going down, then massively up followed by a sharp fall again. Or significant shifts in government policy such as ethanol fuel or solar power. Finally, there is the possibility that the public embrace a new technology or way of doing things that completely changes the competitive landscape for example Amazon and internet book sales or Apples introduction of the iPod and its impact on the music indu