Assumptions of the Five Forces Model. Limitations




Five Forces (Porter) | Five Forces Analysis
Knowledge Center

Best Practices
97
Jane, US

Assumptions of the Five Forces Model. Limitations

The Five Forces model has two basic premises:
The first one is that the goal of a business is long-term profitability.
The second one is that the intensity of competition in an industry is neither a matter of coincidence or bad luck: Competition is rooted in an industry's economic structure.
 

Rating

 
4
Tom, US
 

Assumption in Porter's 5 Forces: Competition

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.

 
4
Danny, UK
 

Assumption: Product (and Services) Markets...

There is yet another important assumption in the Porter Model: that firms are competing only in PROD...

 
2
Dino
Student (University), United Kingdom
 

Limitations of Porter's 5 Forces Model

One more limitation that clearly stands out is that the model does not consider micro, meso or macro...

 
1
Kurt Ludikovsky
Consultant, Austria
 

Economic Crisis in Five Forces

Then you have not asked all questions. You might be right if you don't consider all factors. An eco...

   

More on Five Forces (Porter) | Five Forces Analysis:
Summary
Discuss
👀Assumptions of the Five Forces Model. Limitations
5 Forces in Emerging Industries
Government as 6th Force in Porter's Five Forces
MEDIA as the 7th Force in Porter's Five Forces
Industry Analysis model
Strengths of Porter's Five Forces Model
Substitutes and the Five Forces Model
How does Information Technology alter Porter's 5 Forces
Evolution in our Expectations of Business and Porter's 5 Forces Model
Business Networking: Forces are Getting Connected
Bargaining Power of Buyers. Examples
How to Deal with Competitors in Five Forces Analysis?
Measuring / Calculating the Five Forces of Porter?
There are More than Porter's 5 Forces!
Why Porter's Monitor Consulting Company Failed
Does Competition Increase the Need for Segmentation?
The New Industrial Economics School
🔥Porter's 5 Forces Framework in Non-competitive Situations?
Special Interest Group

Do you have a keen interest in Five Forces (Porter) | Five Forces Analysis? Become our SIG Leader

Five Forces (Porter) | Five Forces Analysis
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2022 12manage - The Executive Fast Track. V15.8 - Last updated: 10-12-2022. All names of their owners.