Porter’s Five Forces, SWOT Analysis, Value Chain, etc.

Michael Porter‘s antiquated, but-still-famous Five Forces of Competitive Position model provides a simple perspective for assessing and analyzing the competitive strength and position of a corporation or business organization.  Your 50-year-old CEO and board have all read this book.  If you want to converse with them, you should read up on it too.

Porter’s Five Forces:

  1. Existing competitive rivalry between suppliers
  2. Threat of new market entrants
  3. Bargaining power of buyers
  4. Power of suppliers
  5. Threat of substitute products (including technology change)

See: Five Forces Diagram

Porter’s five generic descriptions of industries:

  1. Fragmented (e.g. shoe repairs, gift shops)
  2. Emerging (e.g. space travel)
  3. Mature (e.g. automotive)
  4. Declining (e.g. solid fuels)
  5. Global (e.g. micro-processors)

Porter’s Diamond Model:

Porter is also particularly recognized for his competitive ‘diamond’ model, used for assessing relative competitive strength of nations, and by implication their industries:

  1. Factor Conditions: production factors required for a given industry, eg., skilled labour, logistics and infrastructure.
  2. Demand Conditions: extent and nature of demand within the nation concerned for the product or service.
  3. Related Industries: the existence, extent and international competitive strength of other industries in the nation concerned that support or assist the industry in question.
  4. Corporate Strategy, Structure and Rivalry: the conditions in the home market that affect how corporations are created, managed and grown; the idea being that firms that have to fight hard in their home market are more likely to be able to succeed in international markets.

SWOT Analysis Method:

The SWOT analysis is an extremely useful tool for decision-making, reviewing strategy, organizational positioning, or establishing direction in a company, or any other idea in business.  SWOT is an acronym for Strengths, Weaknesses, Opportunities, Threats.  Here’s more info about the origins and inventors of SWOT analysis.  (SWOT Template)

Porter’s Value Chain:

Porter was gifted at simplifying and visualizing business processes.  Here is an example of an extremely complex system of concepts simplified down into a single arr0w-shaped diagram.  Basically, you need an MBA to understand how it can help your organization.

Michael Porter’s key books:

Competitive Strategy: Techniques for Analyzing Industries and Competitors, 1980
Competitive Advantage: Creating and Sustaining Superior Performance, 1985
Competition in Global Industries, 1986
The Competitive Advantage of Nations, 1990

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About bryantanner

I'm obsessed with learning via the appropriate technology. My professional mission is to effectively deliver instruction to learners in a way that yields the greatest results for all stakeholders involved.
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