Wednesday, January 13, 2010

Porter's Five Forces

Porter’s five forces: If you are a management student then I am sure you should know about porter. He is the legend of management theories, he has developed many strategy theories which many firms following now. He developed porter five forces, diamond theory for nation’s competitive advantage and many more theories. We will deal with each and every theory in detail. Let me start with porter’s five forces, which tell us the five forces related to business.
Those five forces are threat to new entry, bargaining power of customer, bargaining power of supplier, competitive rivalry within an industry and the threat of substitutes. Each force will be discussed in separate posts. Performance of a business mainly depends on these five forces and if one can able to manage all these forces successfully then particular firm will get competitive advantage over other firm in same industry.
Switching cost and the competitors also play important role in a business. The given diagram will give you an idea about the five forces which gives impacts more on a business. To analyse the five forces to a company, you have to prepare one questionnaire and answer for those questions. At the end you can find whether the business survive in a marker or not.

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