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


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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