Porter s Five Forces Framework Essay - 1605 Words

In the age of industrialisation and globalisation, there are numerous companies attempting to operate effectively and efficiently. Nonetheless, it seems to be tough for many enterprises, which are struggling to develop, survive, as well as compete against other companies. Therefore, they need wise strategies to efficiently access the balance power in a business situation and determine the level of competitiveness in industries’ environment. Porter’s â€Å"Five Forces† model focuses on business’ external environment where many factors influencing the success of companies, including industry rivalry, competition from new entrants, substitute products, bargaining power of buyers, as well as suppliers. (See Figure 1.). Porter’s Five Forces Framework Source: Adapted from Porter, 2008, p.27. Figure 1. The diagram indicates â€Å"Porter’s Five Forces Framework.† First of all, rivalry among existing competitors is also known as industry rivalry, which contains many kinds of competition, such as pricing strategies, new product launching, advertising campaigns, improvement of current goods and services, and sales promotion. (Dalken, 2014, p.3.). These types competition can be seen as barriers for many new businesses, which want to enter an industry with a high level of existing companies. Moreover, there are some other factors that help companies to determine the level of competitive rivalry, including the number of competing firms, the relative size of companies and marketShow MoreRelatedPorter s Five Forces Framework992 Words   |  4 Pages5 forces analysis Porter s Five Forces Framework is a tool for analyzing competition of a business of an industry in terms of its profitability. 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