Porters_Five_Forces

Porters Five Forces International Business Analysis Explain how Porters Five Forces determines the attractiveness of an industry' What are the implications of the five forces on a firm’s strategy' Is there such a ting as an unattractive industry' Although Michel Porter’s Model of Five Competitive Forces is subject to critique, it still remains, some twenty five years after its conception a valuable tool in that stimulates managers to conceptualise their current situation and proposed changes in a structured way. Classical economic theory suggests that rates of return (risk-adjusted) will be constant across firms and industries. The most profitable companies have a strong competitive position in a highly profitable industry with the less profitable companies having a weak position in weak industries. It is the level of competition within an industry that affects the profits. There is an inverse relationship between profit margins and the intensity of competition: as the intensity of competition goes up, margins and returns are driven down. By nature some industries will be potentially more profitable than others, principally because their competitive position is stronger and are placed within a more profitable industry. Businesses strive to develop markets in which they can achieve ‘super profits’- to reduce the intensity of competition. To suppliers, market, industry, products, power, competitive, customers, rivalry, product, high, buyers, price, entry, threat, reduce, profits, influence, forces, firms, rivals, over, costs, cost, competition, substitutes, profitable, new, five, between, supplier, substitute, strategies, existing, barriers, bargaining