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5 Forces Of Porter

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Autor:   •  May 29, 2011  •  393 Words (2 Pages)  •  679 Views

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To perform the Industry Analysis it is better to follow Michael Porter's five forces model. This analysis framework was created so that it helps managers in their task to analyze competitive forces to the company. (Hill & Jones 80) This model is only one of the models that can be used for this task but it is one of the more popular models. The five forces that we will have to look at for this model are (1) the risk of new and potential competitors; (2) the bargaining power of suppliers; (3) the threat of substitute products; (4) the bargaining power of buyers; and (5) the degree of rivalry among established companies within an industry. (Hill & Jones 80)

The first force in Porter's Five Forces Model is Entry Barriers. These factors are those that make it harder or easier for another company to enter into the industry. High barriers to entry will keep potential competitors out of the industry and low barriers to entry will give an opening for competitors to enter into the industry if the industry returns are high enough. (Hill & Jones 82) The fewer competitors in an industry the more the existing companies can take advantage of higher prices and better returns.

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Hewlett Packard and Compaq, revenues have increased by 107% and 714% respectfully over the past ten years. When IBM and Apple were the only computer systems to choose from people had to make a choice. Depending on the program and the equipment in use, word processors can display documents either in text mode using highlighting, underlining, and color to represent italics, or boldfacing and other such formatting. There have been several companies that have entered the notebook computer business by offering custom-built computers over the Internet. (Hill & Jones 207) This in turn caused IBM to loose their advantage over new competitors. The forms exchange service translates web data into standard EDI format and transfers


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