How Competitive Forces Shape Strategy by Porter

This article was written with clarity and was organized well. The organization of the article was designed by the five “competitive forces” and the elaboration of the forces and how they effect the market. As the article’s thesis statement, proclaims its purpose as to describe the five “competitive forces” that affect the market arena and show how important it is for companies to consider them so that they can adjust to them.  The article was logical in its arguments and description of the forces that affect the market. The five forces are the following:

  1. Contending Forces: the strongest competitive force that determine profitability of an industry.
  2. Threat to Entry: the force to gain market shares and substantial resources.

Barriers to entry: economies of scale, product differentiation, capital requirements, cost disadvantages, access to distribution channels, and government policy.

  1. Powerful suppliers and buyers: the forces that they create can squeeze profitability.
  2. Substitute Products
  3. Rivalry Forces: Competitors can be a force that affects profitability.

The main points of the article are as follows:

–          The “essence of strategy formation is coping with competition (34).”

–          The forces in the market environment can identify his company’s strengths and weaknesses (46).

–          Strategy can be defined as “ building defenses against the competitive forces or as finding positions in the industry where the forces are weakest (47).

–          Exploit new markets- looking at industries can could someday threaten the industry.

Staking out a position among the many forces helps to promote your strengths and exploit others weaknesses.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: