Michael Porter’s Five Forces Essay -- Business Strategy Analysis

Porters 5-Force Analysis Michael Porters 5-forces can be apply to analyze an industry and help shape and create a competitive outline (Porter, 6). Understanding each of the five forces and how they interact with one another provides a clear picture of the degree of competition being faced within an industry, and therefore its relative attractiveness. The understanding cannot provide an advantage it is what you do with the understanding. Without the understanding, a strategy can be at risk of being unrealistic. Michael Porters 5-force Analysis is a tool for the structural analysis of industries. There are 5 forces that always shape the competitive structure of an industry Supplier Power, Barriers to Entry, The Threat of Substitutes, Buyer Power, and Industry Rivalry. I. SUPPLIER POWERSupplier spring is the ability of a provider to control the cost and supply of the inputs in the market. The supplier power of an industry can be altered in many ways1) eminence of Inputs If a com pany needs various inputs from different suppliers, then those suppliers have a proud power.2)Switching Costs for Transferring to Other Suppliers - Supplier power is high if the cost to switch over to a new system is high. 3)Availability of Substitutes If the raw material thats needed for manufacturing can be replaced with alternatives, the supplier power is low.4)Supplier Concentration The fewer suppliers there are, the higher the supplier power.5)Suppliers Dependence on Volume If suppliers are dependent on supply volume, then the supplier power is low.6)Cost Relative to Total Purchases in the Industry If a company thinks that they are being overcharged, they may switch to another supplier. 7)Impac... ...dia.net (30 January 2003)Legamedia.net is mainly a foreign website written in Dutch about Porters Analysis. 6.http//panko.com (30 January 2003)This website is a Ray R. Pankos personal business website. Ray Panko is a prof at the University of Hawaii and has written a number useful sources about information systems and communications. 7.http//www.quickmba.com (29 January 2003)This website includes a detailed summary of Porters Analysis. Information utilise from this site includes a diagram of Porters Five Forces. 8.http//www.themanager.org (31 January 2003)This website offers a description of various management tools including Porters Five Force Analysis. 9.Porter, Michael E. warlike Strategy. New York, New York The Free Press, 1980.This book written by Michael Porter is unaltered information about his theory.