PORTER'S FIVE FORCES MODEL-COMPETITIVE ANALYSIS

Porter’s Five Forces Model-Competitive Analysis

Every business operates in the competitive environment. Michael Porter believes that the basic unit of analysis for understanding is a group of competitors producing goods or services that compete directly with each other. It is the industry where competitive advantage is ultimately won or lost. It is through competitive strategy that the organisation attempts to adopt an approach to compete in the industry.

The character, mix, and intricacies of competitive forces are never the same from one industry to another. A powerful and widely used tool for systematically diagnosing the significant competitive pressures in a market and assessing the strength and importance of each is the Porter’s five-forces model of competition. (see figure) This model holds that the state of competition in an industry is a composite of competitive pressures operating in five areas of the overall market:

•  Competitive pressures associated with the market manoeuvring and jockeying for buyer patronage that goes on among rival sellers in the industry. 
•  Competitive pressures associated with the threat of new entrants into the market. 
•  Competitive pressures coming from the attempts of companies in other industries to win buyers over to their own substitute products. 
•  Competitive pressures stemming from supplier bargaining power and supplier- seller collaboration. 
•  Competitive pressures stemming from buyer bargaining power and seller-buyer Collaboration.
• The strategists can use the five-forces model to determine what competition is like in a given industry by undertaking the following steps: 

Step 1: Identify the specific competitive pressures associated with each of the five forces.

Step 2: Evaluate how strong the pressures comprising each of the five forces are (fierce, strong, moderate to normal, or weak).

Step 3: Determine whether the collective strength of the five competitive forces is conducive to earning attractive profits.

  http://www.comgurukul.com/educational-books/gst-book/

GST (Goods and Services Tax) Book -A student friendly Latest and Updated Best GST Book - Bharat Gurukul
GST Student friendly Book most relevant/Useful for CA Intermediate/IPCC, CS executive , CWA Intermediate