porters model
Daniel Oliveira September 20, 2013
Business 211- Principles Of Marketing (Section OAC) Essex County College
Porter’s Five Modules
Porter’s Five Forces is a groundwork for industry analysis and business strategy development which was invented by Michael Porter in 1979. Three of Porter’s five forces relates to competition from external sources. The remaining two are internal threats. These five forces include three forces from horizontal competition such as the threat of substitute products or services, the threat of established rivals, and the threat of new entrants. The two forces from the vertical competition include the bargaining power of suppliers and the bargaining power of customers. These five forces has been put in place to assist businesses become more profitable and helping governments stabilize industries.
The intensity of rivalry usually is referred as being cutthroat, intense, weak, or moderate, based on the firm’s aggressiveness in trying to gain an advantage in the marketplace. In attempt to gain an advantage over its rivals, a firm can opt for several competitive moves such as changing prices, improving product differentiation, creatively using channels of distribution, or exploiting relationships with suppliers. The intensity of rivalry is influenced by several industry characteristics such as a larger number of firms, slow market grow, and low switching costs. Larger number of firms increases rivalry due to firms competing for the same customer and resources. Slow market rate compels firms to battle for market share. Low switching costs increases rivalry when customers can freely switch from one product to another.
The threat of substitutes exists when a product’s demand is
Business 211- Principles Of Marketing (Section OAC) Essex County College
Porter’s Five Modules
Porter’s Five Forces is a groundwork for industry analysis and business strategy development which was invented by Michael Porter in 1979. Three of Porter’s five forces relates to competition from external sources. The remaining two are internal threats. These five forces include three forces from horizontal competition such as the threat of substitute products or services, the threat of established rivals, and the threat of new entrants. The two forces from the vertical competition include the bargaining power of suppliers and the bargaining power of customers. These five forces has been put in place to assist businesses become more profitable and helping governments stabilize industries.
The intensity of rivalry usually is referred as being cutthroat, intense, weak, or moderate, based on the firm’s aggressiveness in trying to gain an advantage in the marketplace. In attempt to gain an advantage over its rivals, a firm can opt for several competitive moves such as changing prices, improving product differentiation, creatively using channels of distribution, or exploiting relationships with suppliers. The intensity of rivalry is influenced by several industry characteristics such as a larger number of firms, slow market grow, and low switching costs. Larger number of firms increases rivalry due to firms competing for the same customer and resources. Slow market rate compels firms to battle for market share. Low switching costs increases rivalry when customers can freely switch from one product to another.
The threat of substitutes exists when a product’s demand is