Government as 6th Force in Porter's Five Forces

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Five Forces (Porter) | Five Forces Analysis > Best Practices > Government as 6th Force in Porter's Five Forces

Government as 6th Force in Porter's Five Forces
Naveen Ahuja
Who can give an explanation of the government factor in Porter's Five Forces? What is it? Who introduced it?

Example Goverment Force in Five Forces
Abdur Rob
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.

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
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.

The 6th force
Anders Nystrom
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.

Govt. as the 6th Force
K. Gopalakrishnan
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.

Government as the 6th Force
Stefan Guenther
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.

Re: Government sixth factor?
David Paul
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.

Role of Government
Deb M
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).

Free Market or Controlled Economy
Jeswan SinghPS, Engineer, Malaysia, Member
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.

Government in Five Forces
Gianvittorio, Turnaround Manager, Netherlands, Member
Hi, if you believe Mr. Porter then government is not one of the forces.
See this video, in which he talks about why government should not be considered one of the forces.

Let Government Be Out of the 5 Forces Model
Jagdish B Acharya, Consultant, India, Premium Member
Governmental controls normally affect all forces and can be treated by their effect separately. These forces work with very complex motives which are different from business management and hence difficult to be modelled.
Governments are painted badly most often but they do have some stabilizing influence and often represent consumer's voice.

Early Enrichments of the Original Model by Austern
Mario A. G. Lopez, Professor, Philippines, Member
Sometime in the late '80s, Porter's Harvard colleague Jim Austem located the five forces model within the context of developing countries where government plays a more marked role - not always bad - in nurturing and fostering growth of enterprises and industries to improve national economies. Worthwhile going back to look at that enlarged model.

Porter's Original Article
Elliot Wood, Business Consultant, Australia, Member
I think in his original article on the Five Forces Porter explicitly notes that government is NOT a sixth force as it is too broad and its actions are neither good nor bad for an industry - individual policies should be the level of analysis, not government as such.

Originator of the 6th Force of the Model
Martyn Richard Jones, Strategy Consultant, Member
According to most references, the sixth force is government or the public. Martyn Richard Jones, whilst consulting at Groupe Bull, developed an augmented 5 forces model in Scotland in 1993. It is based on Porter's model and includes Government (national and regional) as well as Pressure Groups as the notional 6th force. This model was the result of work carried out as part of Groupe Bull’s Knowledge Asset Management Organisation initiative. Source: Wikipedia.
So, the originator of government as the sixth force is in fact the aforementioned Martyn Richard Jones.

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