Porter Five Forces Analysis
Running head: PORTER’S STRATEGIC FRAMEWORK
Porter Five Forces Analysis
Managerial Economics – MBA 500
Instructor: Professor Franklin
By: LaTonya Perryman
Submitted in partial fulfillment of the requirements for the degree of
Master of Business Administration
Concordia University Wisconsin
November 1, 2011
Table of Contents
Introduction……………………………………………………………………………3
Michael Porter’s Strategic Framework…...……………..……………………..………3
The Long-run Efficiency Implications of an Oligopoly……………………………...4
Advantage and Disadvantage of the Oligopoly Market Structure…………………...4
The Reason for the Rapid Spread of Global Oligopolists.……………………………3
Summary………………………………………………………………………………3
Introduction Porter’s Five Forces is a framework for industry analysis and business strategy that was formed by a Harvard Business School affiliate, Michael E. Porter in 1979. This framework is used for identifying the five structural determinants of intensity of competition and of profitability of firms in oligopolistic industries. This paper will discuss these Five Forces in detail and apply all relevant microeconomic concepts to explore the relationship between Porter’s framework and the oligopolistic industries and its effects on today’s market.
Michael Porter’s Strategic Framework Michael Porter’s five forces that make up his proposed strategic framework include the threat from substitute products, the threat of entry, the bargaining power of buyers, the bargaining power of suppliers, and lastly, the intensity of rivalry among existing competitors.
Because Porter’s references are in reference to oligopolistic industries, we must first start out by defining exactly what an oligopoly is. The definition given in the text Managerial Economics in a Global Economy by Dominick Salvatore states that Oligopoly as the form of market organization in which there are few sellers of a homogeneous or differentiated product. It further states that Oligopoly is the
Porter Five Forces Analysis
Managerial Economics – MBA 500
Instructor: Professor Franklin
By: LaTonya Perryman
Submitted in partial fulfillment of the requirements for the degree of
Master of Business Administration
Concordia University Wisconsin
November 1, 2011
Table of Contents
Introduction……………………………………………………………………………3
Michael Porter’s Strategic Framework…...……………..……………………..………3
The Long-run Efficiency Implications of an Oligopoly……………………………...4
Advantage and Disadvantage of the Oligopoly Market Structure…………………...4
The Reason for the Rapid Spread of Global Oligopolists.……………………………3
Summary………………………………………………………………………………3
Introduction Porter’s Five Forces is a framework for industry analysis and business strategy that was formed by a Harvard Business School affiliate, Michael E. Porter in 1979. This framework is used for identifying the five structural determinants of intensity of competition and of profitability of firms in oligopolistic industries. This paper will discuss these Five Forces in detail and apply all relevant microeconomic concepts to explore the relationship between Porter’s framework and the oligopolistic industries and its effects on today’s market.
Michael Porter’s Strategic Framework Michael Porter’s five forces that make up his proposed strategic framework include the threat from substitute products, the threat of entry, the bargaining power of buyers, the bargaining power of suppliers, and lastly, the intensity of rivalry among existing competitors.
Because Porter’s references are in reference to oligopolistic industries, we must first start out by defining exactly what an oligopoly is. The definition given in the text Managerial Economics in a Global Economy by Dominick Salvatore states that Oligopoly as the form of market organization in which there are few sellers of a homogeneous or differentiated product. It further states that Oligopoly is the
Cited: Porter, M. (1979). How Competitive Forces Shape Strategy. Harvard Business Review, 1, 1-10. Retrieved October 29, 2011, from http://www2.fiu.edu/~ikhurana/Porter%27s%205%20Forces.pd Salvatore, D. (1996). Managerial economics in a global economy (6th ed.). New York: McGraw-Hill.