Five Forces
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Michael Porter Five Forces Analysis Michael Porter’s Five forces framework as explained by Kotler and Keller (2011) as well as Proctor (2000, pg. 103) is an analysis method that involves analyzing a specific sector from five various perspectives in order to establish the nature of competition in the given sector. The five different forces in the framework consists of bargaining power of buyers, competitor rivalry, threats of new entrants, bargaining power of supplier and threat of substitute products.
Bargaining power of suppliers According to Peng (2008, pg. 35), suppliers will only have the power in situations where they are few in numbers. In perspective of Facebook, suppliers consists of hosting services providers as well as other third party services providers. Since, there are a lot of suppliers to Facebook, the threat posed by the suppliers can be argued to be low.
Bargaining power buyers Stonehouse et. Al. (2004, pg. 119) pointed out that buyers have high bargaining power when they are few in numbers. The buyers of Facebook who are the actual users can be argued to have a low bargaining power since they are large in numbers.
Competitor Rivalry “Any sector that has a lot of competitors experiences high levels of competition as the competitors adopt various strategies in order to compete for market share”. “Abraham, 2012, pg. 62). Since there are numerous competitors to facebook such as My Space, Twitter, Bedo, Hi5 and Linked in among others, the threat posed by the competitors to Facebook can be said to be high.
Threat of new entrants “ In situations where it is easy for any organization to establish in any given sector, the threat posed by the new
Tutor:
Lesson:
Date:
Words:
Michael Porter Five Forces Analysis Michael Porter’s Five forces framework as explained by Kotler and Keller (2011) as well as Proctor (2000, pg. 103) is an analysis method that involves analyzing a specific sector from five various perspectives in order to establish the nature of competition in the given sector. The five different forces in the framework consists of bargaining power of buyers, competitor rivalry, threats of new entrants, bargaining power of supplier and threat of substitute products.
Bargaining power of suppliers According to Peng (2008, pg. 35), suppliers will only have the power in situations where they are few in numbers. In perspective of Facebook, suppliers consists of hosting services providers as well as other third party services providers. Since, there are a lot of suppliers to Facebook, the threat posed by the suppliers can be argued to be low.
Bargaining power buyers Stonehouse et. Al. (2004, pg. 119) pointed out that buyers have high bargaining power when they are few in numbers. The buyers of Facebook who are the actual users can be argued to have a low bargaining power since they are large in numbers.
Competitor Rivalry “Any sector that has a lot of competitors experiences high levels of competition as the competitors adopt various strategies in order to compete for market share”. “Abraham, 2012, pg. 62). Since there are numerous competitors to facebook such as My Space, Twitter, Bedo, Hi5 and Linked in among others, the threat posed by the competitors to Facebook can be said to be high.
Threat of new entrants “ In situations where it is easy for any organization to establish in any given sector, the threat posed by the new