Limitation of Porter Analysis

Limitation of Porter Analysis

The porter's 5 forces is a useful framework for competitive analysis within industry. Competitive analysis is lead into strategic planning and the development of a tailored competitive strategy that expects to exploit the situation. The porter's 5 forces model has some limitation and weaknesses. In general, porter's analysis focuses on company external competitive environment. In order to complete a full competitive analysis, the porter's 5 forces need to be compensated.

The porter's 5 forces has further limitation in today market environment because porter's analysis is assumes relativity static market structures. This means porter's 5 forces are applicable for simple market structures not best applicable for today dynamic markets. Today dynamic markets are highly influenced by technological innovation such as information technology, so porter's analysis cannot analyze today dynamic changes.

The second limitation of porter's analysis is generally based on the idea of competition. In porter's analysis just described how to company or business to achieve competitive advantages. Porter's analysis just focuses on competitive advantages and then ignores other important consideration strategy. For example, company not really into consideration strategy such as electronic linking of information system of all company along a value chain, virtual network or enterprise and strategies alliances.

The third limitation of porter's analysis is porter's 5 forces are designed for analyzing individual business strategy. Porter's analysis cannot cope with interdependencies and synergies within the portfolio a large company. The fourth limitation of porter's analysis is the sources of value are structural advantages. Sometimes may be possible to create barriers to entry. This mean porter's analysis possible will create completely new market rather than selecting existing ones.

Although porter's analysis are not best applicable for today dynamic...