Five Competitive Forces (Porter)

└► Agustin (Argentina)	Calculating the Forces	"In order for this analysis tool to be effective, you may want to consider a few aspects: A) In order to solve any optimization problem you need to apply the right formula m(x;y;z;... n) B) This method stands for a non-numeric type of analysis. It is very hard to determine, whether a co-efficient would be effective or not. Yet, a few of them may be calculated. I'm not quite certain about them, but for example: Competitors: it would be interesting to know how many competitors exist in the whole market. By knowing this amount, you may decide which style of scale economy you need. If there are only 2 rivals in the same market, you may choose a Stackelberg model, by simply defining your price as a leader, hence: P = a - b [q1+r2(q1)]; where r2 stands for the reaction."
└► Anil Kshatriya (India)	Calculating Porter's 5 Forces	"Porter's five force model is more of a tool to understand factors that affect competition. It is ordinal and not cardinal in nature. In its true spirit, we must look at it as a map and not as actual territory. We may use it for direction but must avoid trapping our judgements only based on exhibits used therein."
└► Mrinal Ghosh (India)	@ Anil Kshatriya	"Hi Anil, why do you feel that they are ordinal in nature and not cardinal. I see a similarity between these and the GE Matrix. If we can have coefficients for the GE matrix, then why cant we calculate Porter's Forces?"
└► Anil Kshatriya (India)	@Mrinal	"Why not. It can be extended to logic of the GE Matrix. I only have one apprehension that we might get caught in the loop of proving dominant strategies for the game. This takes us away from the big picture."
└► Mrinal Ghosh (India)	Sub Parameters	"With due regards, though it is a mixed game, I guess the coefficients can be calculated by considering some of the main forces and their sub parameters. For example, in case of competitive intensity it can be measured by checking the number of competitors in the market and their approach to the game you play (though it comes later, only after you have entered the market). Personally I feel we can project the measured values by segmenting the market in two types - developed and emerging. The market dynamics will remain the same across the segments and the manner these forces would react would be same across developed markets and so in case of emerging markets."
└► Jagdish B Acharya (India)	Hurdles Too Strong to Calculate	"Though we like the idea of calculation, everything cannot be calculated, because: 1. The company is in a dynamic situation and no static factors can be applied. 2. The influencer of factors also gets influenced by factor. This is like "snakes eating each other" paradox. 3. The pace of change often is higher than the rate at which factors could be calculated or estimated. 4. No competitive advantage is static and when an advantage is seen, players act to use it and that neutralizes it. 5. Often players with "gut" sense rather than analytical strength play and that upsets the predictably of the factors. Because of the interdependence of forces and objects, any conclusions or use for tactics is risky. One may however take help of evaluation of forces and determine strategy to derive advantage from this knowledge. Calculating and taking help for tactical decisions in my view is dangerous and should be avoided."
└► Agustin Cosso Leskovar (Argentina)	Sub Parameters	"Mrinal, I have made some research in my math books here at home. I think there is a way to determine the future impact of a chain of events by considering only its recent ones. It's a stochastic process. You may want to apply the Markov Process or the Garman-Kohlhagen Formula. And if you are determined and have enough data you can even split the market segments into developed and emerging as you stated."
└► Mrinal Ghosh (India)	Historical Data	"Yes, also we can have a look at the historical data to analyse how the markets have behaved in these situation. For example if we take the US automotive market in very early 1900s or the tire industry (when they were at growth stage) and understand how the forces behave in these economic conditions then we can actually extrapolate that to current emerging markets. However we need a lot of empirical data."
└► H D Sharma (India)	Calculating the Magnitude of the Five Forces Quasi Quantitively	"Hi the group! The idea is fascinating but we must remember that the numbers so estimated or generated would at best be soft numbers to be interpreted only quasi quantitatively. These estimates can only be amenable to rank statistics and analysed through loglinear or logit analysis. Having said that I would like to mention that loglinear and logit analysis are only qualitatively interpreted."
└► Agustin Cosso Leskovar (Argentina)	Garman-Kohlgane	"HD Sharma, with the GK formula you shouldn't have to do any qualitatively interpretation, you just have to adjust the variables to fit the information required, always considering there are two type of variables: static and floating. However it is true, you may need huge algorithms, and therefore, a lot of information, which will not be easy acquirable. If I have some free time today, I'll try to adjust the formula to measure market changes and flows."
└► Umesh (Ooman)	Many Variables	"When variables are many, analysis becomes complicated, even when data is available. So 5 force analysis is a tool which can give you some idea about the conditions in which a business is."
└► Hans Jørgen Pedersen (Denmark)	The Model is Non-numerical in Nature	"Until I come across a very advanced micro econometric model (i.e. a book on the subject), I take the view that Porters five forces is more a mind map for strategic consideration than a numerical tool. To assign parameters based on available data and mechanically go with the computed result is a very dangerous business. Common sense goes a long way on its own; but a computer program capable of interpreting industry data according with the P5F Model is a very ambitious goal in my opinion. It involves stochastic programming on a level beyond my imagination, as the world is changing way too rapidly for historical data to be of any benefit."
└► Jose Delgado (Mexico)	Five Fources Measures	"In my personal point of view, I think it should be fantastic to use algorithms and formulas to predict business but nowadays it is very difficult and definitively is not a good idea to do that when markets are very unstable and in fact maybe the best option to understand is to use the theory of chaos. Finally if you want to give some importance to one or two of the five forces, then maybe should be better if you determine a percentage of importance, which can depend on the specific situation of your business."
└► Parvez (Mauritius)	Calulating Forces by Social Engineering	"I believe these statistical tools are important but we should favour social engineering also. This allows us to get a clear picture of the reality and confirm our decisions based on stats."

	└► Tom (US)	Assumption in Porter's 5 Forces	"Yet another major assumption of Porter's Five Forces Framework is that he views all industries as based on COMPETITION. However there are important exceptions on this view, such as for example in the automotive industry, where strong COLLABORATION between assemblers and their suppliers have turned out to be very beneficial for all parties. The same may be the case for knowledge-intensive industries, since knowledge sharing increases its overall value. Furthermore, Edward Freeman argues that the economic paradigm of competition should be replaced by the more sustainable paradigm of collaboration with stakeholders."
	└► Danny (UK)	Assumption: Product Markets...	"There is yet another important assumption in the Porter Model: that firms are competing only in PRODUCT OR SERVICES MARKETS (where firms compete for customers). However firms are actually competing in two markets. The other one being: FACTOR MARKETS(where firms compete for resources). These resources can include a variety of tangible and intangible assets, and even stakeholders such as shareholders-investors, banks-creditors, employees-talent, managers, the media,etc. Often this competition for stakeholders is cross-industry!"

                       
                        └► Mitesh (Australia)
                        
                      Porter's five forces analysis
                      "Its a good article for those who want guidance on how to conduct industry analysis for an organisation or for any academc purpose."

                       
                        └► Patricia (UK)
                        
                      Five Forces for Local Authorities
                      "Has anyone tried to use the tool applied to a local authority? If yes - was it useful?"

                       
                        └► jihan (Dubai)
                        
                      HR
                      "could i have this copy"

└► Abdur Rob (Bangladesh)	Example Goverment Force in Five Forces	"I can't tell you who introduced this 6th Force, but the example below can justify the reason. Nowadays, many Governments have established regularity bodies. As an example, in Bangladesh, Bangladesh Telecom Regularity Commission (BTRC) fixed the price ceiling (BTD 0.25 - BDT 2.00) for cellular phone. This is one of the forces for the cellular operators to maintain this price range."
└► Alchui (Singapore)	Government and 5 Forces	"The Government plays the role of "Caregiver/Policeman" who regulates the economy [See Porter's Diamond of National Advantage]. Government "provides" the land space for development, upgrading and funding schools and skills, size of population and labour force, attract foreign investors, encourage entrepreunership, regulates the imports and exports, regulates the industries and its business policies, etc. The Government will "nurture" the growing industries, thus some firms/industries benefit from this force more than the others."
└► Dr. Uditha Liyanage (Sri Lanka)	FiveForces	"Government, the proposed sixth factor may well impact all five factors. Moreover, the 5 forces have to be placed within a context or framework, a key element of which is the Government."
└► Anders Nystrom (Sweden)	The 6th force	"I have a background in systemical thinking, the theories of sociotechnical systems. Generally to handle forces you have to define borders of different levels of systems as a first step. Porter´s model is defined as the market and this 6th force is just one of several forces on the level above the market, e.g. nations or EU. Another force on the level above is institutional conmpetition, there are more (is another story). The forces on the level above effect the whole market system at the same time and in similar ways."
└► K. Gopalakrishnan (India)	Govt. as the 6th Force	"I had modified the Five Forces of Porter with Government as the 6th Force for my pharmaceutical management students in ies college, bandra, mumbai long back. In pharma business this is very relevant and this was well accepted by pharma professionals who came to know about this modification of the 5 forces."
└► Stefan Guenther (Germany)	Government as the 6th Force	"I work in the financial industry and particularly in my field the existence and activity or non-activity of whatever regulatory body is quite visible right now and will no doubt play a more important role in the future, thus defining the playing field and the rules for actors. In the investment industry I regard this 6th force as one of the most important ones, more than new market entrants in this market under pressure."
└► David Paul (India)	Re: Government sixth factor?	"If you give a chance of reading the Book 'Only the Paranoid Survive' by Andy Grove, he explains the role of the government as a sixth force. The HBR article of January 2008 by Porter, disagreed with all the views and in toto of the whole process, he says that the government is not a force which enduces us to understand the industry profitability but, an important factor. Remember he says that the factors are nothing but complementors as proposed by Grove and disagreed by Porter.... Porter in his competitive advantage of Nations gives a much better outlook to the role of the government in this regard, Thanks and regards."
└► Deb M (Singapore)	Role of Government	"Government Forces can either be categorized as a Business Entity like in a state control enterprise or as a Barrier. In most countries given its executive & legislative power Government acts as a barrier (read: regulator)."
└► Jeswan Singhps (Malaysia)	Free Market or Controlled Economy	"Porters model works well or is more suited to a free market economy where the main determinants are the forces of supply and demand. In a controlled economy where there is government intervention to meet certain social objectives, then the business rationale is different and often results are achieved at a much higher cost."

	└► rajesh (india)	research	"it was very informative"
	└► Reza (Iran)	5 Forces Questionnaire	"Who can provide a questionnaire that helps to assess the competitive forces using the Porter model?"

                       
                        └► Ilya (Russia)
                        
                      economy theory
                      "!"

└► Shiaka (Sierra Leone)	5 Forces Model	"These forces have an application to industry but I'm not sure if they can really be applied to small businesses in our region, which share the same characteristics."
└► Joseph Munyao (Kenya)	5 Forces Model	"Quite a well thought through model, but may need to be adjusted to have meaning to small scale businesses. Especialy in the informal sectors of developing countries like in Central and Eastern Africa."
└► Gervis Ochoa (Venezuela)	Competitive Forces	"This is a great tool for Projects and Strategic Management Decision Making approaches. It helps to do companies valuation and also helps to buid a solid strategy when companies face the sharp force of competition and rivalry. I used this piece of information to finish a project for one of my exit courses at USF in Tampa Florida. Great Help. Well outlined."

	└► abhishek rautela (UK)	Only Porter's 5 forces is not enough	"I would like to disagree on excessive dependence on Porter's 5 forces for formulating any strategy. I agree with Jan, and would like to add on that this TOOL must be used only to get a better picture and NOT to conclude any strategy. It gives you a good idea but of very basic nature. Any business, no matter what its nature is, is exposed to these basic forces and this tool only helps is to recognize them. You might want to include other tools (Margaret Peteraf’s model) and other tools and theories to see a better picture. In such a dynamic and uncertain world, no one tool or theory will be sufficient. So, I would rather advice a cocktail than a straight-up."
	└► Siddharth P (UK)	Its a Tool.. Which If Applied in the Right Way Can Provide Signigicant Insights	"Any business revolves around these forces.... Whether it be a big daddy or a micky mouse organization.. What matters for profesionals using this tool is the application of the tool coupled with other strategic management tools like PESTLE, TOWS, VRIO .. and many more :-)"

└► Emmanuel Duru (Nigeria)	How does Information Technology alter Porter's 5 Forces	"It may affect Porter's 5 Forces but not totally, considering that there are inherent factors which cannot be manipulated digitally. Any outcome will be an assumption; which may not be absolute. So, it takes a lot of understanding of the environment for which the 5 forces model is applied."
└► Hemant Johri (India)	The dynamics of the forces may be changed	"The 5 competitive fundamental forces do not change with IT. They remain the same. However: IT may change the dynamics of these forces. What IT does is listed below: 1. It can make information available at higher speed. 2. As a tool it provides speed and accuracy in preparation, processing and analysis of available data. 3. When applied in an industry it can lead to transformation or innovation of processes. This may provide competitive advantage to the firm either in terms of cost reduction or by disruptive innovation."
└► Jimish Shah (India)	4 ways in which IT alters Porter's 5 Forces	"1. IT may increase the buyers bargaining power as information of substitutes and prices are easily available. 2. IT can help bring suppliers and the firm together and work in collaborative mode. This will be an added advantage for the firm over its rivals. 3. Software packages like CRM, SRM, PLM can improve the competitive position of the firm and increase collaboration between all the entities in the Supply Chain. 4. IT can be used to improve processes and efficiency. This can help the firm to be cost effective and technologically advanced. This will increase the barriers for entry for new entrants."
└► carlos medina turon (Mexico)	Add Stakeholders Concept	"I recommend to review the concept "STAKEHOLDERS" besides the 5 Forces once you have to ask for opportunities and forces, regarding Labor Markets, Communities, Universities that feed professionals, Media, Banking and Insurance Companies, Environmental Agencies, Non Govt. Organizations, Tax Agencies, all Stakeholders providing opportunities and forces as long as they are related to the company of course."
└► MENSUR (Albania)	The validy of Information Technology	"I think that IT can influence all of the five forces but we must be careful about information how sure it is. Also: is the technology good enough like it is? And: can it help me to do something in my business? And: how much will be the costs to my budget to use this technology... And: some technologies have a life time and have to be substituted or changed..."
└► Muder Chiba (India)	Information Arbitrage	"Essentially, the same points that the other are making... It would affect decision-making using the model insofar that the better users of IT would be able to gain superior leverage. This leverage would come about through faster information flows, enhanced data interconnections / trend spotting and superior information sharing for decision-making."
└► Kwame Yeboah (Ghana)	IT does alter Porter's 5 Forces	"Which ever way one looks at it, IT DOES alter the 5 forces (compared to the traditional forms in which it does). THREAT OF NEW ENTRANTS: Since the power of the internet has made the world a global village, it is easier for our Chinese brothers (for example) to reach people in Ghana with textile products for instance, hence competing with the industry here in Ghana. THREAT OF SUBSTITUTES: India is offering a substitute to the expensive American data entry clerk's services by working online at a much cheaper cost to the American employer (via the internet) BARGAINING POWER OF SUPPLIERS: There are many more suppliers now than those from ones immediate locality or country so suppliers aren't that powerful any longer. INTENSITY OF RIVALRY: There is surely more rivalry now. Zenith bank is now in Ghana (along side several other Nigerian banks) and they don't only reach me through the local media but also through CNN! The local banks have no choice but to sit up!"

                       
                        └► Editor (Netherlands)
                        
                      5 Forces and Internet
                      "12manage Premium is having a comprehensive expert tip about this complex issue."

                       
                        └► Molepo (South Africa)
                        
                      What are the other Forces?
                      "I just wanna know what are the other forces except the ones that are indicated above on this page. This is very interesting, i think there can be more of this. Is there any?"

Five Competitive Forces
(Porter)

Outside-in Business Strategy. Explanation of Five Competitive Forces of Michael Porter.

What is the Five Forces model of Porter? Description

Threat of New Entrants depends on:

Threat of Substitutes depends on:

Bargaining Power of Suppliers depends on:

Bargaining Power of Buyers depends on:

Intensity of Rivalry depends on:

Strengths of the Five Competitive Forces Model. Benefits

Limitation of Porter's Five Forces model

Overview of the Book "Competitive Strategy"

Five Forces Special Interest Group

Five Forces Forum

Five Forces Education & Events