THE FIVE COMPETITIVE FORCES THAT MODEL A STRATEGY Michel E. Porter

THE FIVE COMPETITIVE FORCES THAT MODEL A STRATEGY Michel E. Porter

1. WHAT ARE THEY?

   • It is a holistic (global) way of looking at any industry and understanding the underlying structure that determines its profitability and level of competition.

2. OBJECTIVE

   • They help determine what really generates profitability in the industry.
   • Identify which of the trends is the most likely to change the game in the industry.
   • Identify where are the limitations that can be flexible to achieve a better competitive position.

3. AFFIRM THAT:

   • Yes, you are competing with your direct competitors, BUT… you are also in a battle with PROFITS with a broad set of competitors.
     • CUSTOMERS
       • They have the bargaining power
     • SUPPLIERS
       • They look to catch a piece of the action
     • SUBSTITUTE PRODUCERS or SERVICES
       • They are a limitation will be for your profitability and growth

4. HOW TO APPLY ANALYSIS IN INDUSTRIES?

   • These concepts can be applied to ANY INDUSTRY: high or low tech, emerging developed economies.

5. STRENGTHS OF THE SCHEME

   • Helps avoid being caught or fooled by new tech trends or sensations
   • Lets focus on core values

6. How to start using the five forces scheme

   • ANALYSIS OF THE INDUSTRY and OBSERVING THE COMPETITIVE ENVIRONMENT is the initial basic discipline in any PROCESS OF STRATEGIC FORMULATION

7. THE FIVE FORCES GIVE THE TOOLS TO UNDERSTAND THE DYNAMICS

   • Where the structure of the industry is changing
   • How CLIENTS, SUPPLIERS, SUBSUTITUTES and POTENTIAL COMPETITORS evolve
   • What implications do they have on your strategy
   • How do you position yourself
   • Find a place within the industry where you can make good profits
   • Change the dynamics of the industry

8. LILIANA ANDREA MACIAS NRC 5232