The Five Forces Framework and Competitive Strategy

In this framework due to Michael Porter there are two high-level stages in the creation of competitive strategy, each stage corresponding to a high-level determinant of profitability mentioned in the previous section. The first stage is the assessment of the attractiveness of the industry in which a given company is embedded based on a structural analysis of the industry. In this stage, called the five forces framework, five forces that influence industry attractiveness are identified, as well as the factors (e.g., number of competitors, size of competitors, capital requirements) that determine the intensity of each force and therefore the cumulative intensity of the five forces. The …show more content…

For each force, determine the key structural determinants which affect the intensity of the force. Porter provides a detailed set of the determinants for each force, some of which are given in the table below. In the last column of this table we indicate plausible values of each force for the PC industry in the nineteen nineties.
|Force |Key Determinants |Strength of the force |
|Rivalry between competitors |Concentration (number) and size of |Medium to high |
| |competitors | |
| |Brand identity | |
|Barrier to entry |Economies of scale |Medium to high |
| |Brand identity | |
| |Capital