Porters 5 Forces

WK 2 DQ

How useful would Porters 5 forces model be as a framework for analyzing the industry your company (or others) operates in?

Porters 5 forces model is an industry structure analysis framework for determining the attractiveness or lack thereof, of a particular industry or economic sector based on the various factors of competitiveness.

The 5 forces as stated by Michael Porter are:

- Threats:

1. Substitute Products: The threat of substitute products is based on products/services that are, “direct competition and those are not considered direct competitors…” according to Williamson et al. (2004:80)

This threat limits available price level accomplishments and can lower industry attractiveness and profitability. This is relative to the performance and price ranges of the substitute products available, switching costs, which would be absorbed by the buyer and the buyers willingness to substitute.

For the World Food Programme, this is very difficult to determine, as the organization is not in the profit making business. However, in a country where it would be operating, a substitute would be welcomed in by the programme, as being aid driven, the UN would not want to continue operating in a country inevitably but help the people when there is a need and assist to get the economy back up and running to a level of self sufficiency.

For another industry and company like Toyota, substitute products could arrive in many forms dependent on country such as other forms of mobility including public transport systems, product differentiation and used car markets.

2. New Entrants: According to an online article by www.tutor2u.net, “The threat largely depends on the barriers to entry. Key barriers include, economies of scale, capital/investment requirements, customer switching costs, industry distribution channel access, industry player retaliation likelihood.”

For an organization such as...