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Marketing - Porter's Five Forces

Business leaders commit significant resources to the challenge of determining their market strategy, and they are provided with numerous analytical models to help them accomplish this. Using these models helps decision makers to feel more comfortable in their choices because these models offer a formal framework through which analysis can be conducted. If the strategy that is chosen fails, the decision makers can point to the model and hold it at fault rather than choosing some other factor such as changing marketing conditions or having used the model incorrectly. To the extent that decision makers rely on these models, it is important that they continue to be relevant in today's turbulent economic and financial environments. Many of these models were developed many years ago and have not necessarily been updated to reflect the global economy, let alone take the Internet and other factors into account. This analysis considers one such analytical model, Porter's Five Forces, and whether the model is still relevant for today's strategic marketing decision makers.

Michael Porter developed his Five Forces model in the late 1970s while working at Harvard University (where he continues to teach today). Porter's model is based on industry structure and maintains that forces within each industry shape the performance and behavior of firms within it. At the same time, the behavior of firms within the industry changes the structure of the industry, as well. The Five Forces are thus iterative being both influenced by and influencing the various participants within the industry (Ormanidhi & Stringa 2008).

The five forces that Porter identified are threat of entry, substitute products, rivalry among existing competitors, power of suppliers and power of buyers. Of these, the first three are related to the horizontal market while the last two correspond to vertical market considerations. Porter went beyond just...

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Marketing - Porter's Five Forces. (1969, December 31). In LotsofEssays.com. Retrieved 06:50, March 29, 2024, from https://www.lotsofessays.com/viewpaper/2000975.html