Question

Research an innovative organization, and analyze how the organization uses Porter's Five Forces Model.

Answer 1

Michael Porter developed the five forces model to analyse the external factors which influence the companies achievement of goals, the environment of the industry it works within including the competition and also it's demand supply situation. It is an excellent analytical study which helps strategize actions and plans of the entire organisation, through educated and informed decision making, to ensure achievement of goals and optimal results. It is also a model which ensures effective implementation of control measures as it analyses the negatives along with the positives. For example for even a leader in an industry the model helps to analyse areas of focus and control to ensure the company can maintain the required leads in it's sector.

If we apply this model to analyse Facebook Incorporated we can understand clearly the areas where the organisation needs to have a focus, as it is already the leader in the industry of social media, which is the major sector of its operation. It also is affected by online display advertisement industry environment.

The analysis of Facebook ravines back for competitive rivalry of competition there exists a moderate force, bargaining power of buyers office kms a strong force, burning power of suppliers a weak force, strong force from sector substitute for substitution where is threat of new entrants into its sector is a weak force. Upon analysing this we can understand that Facebook is able to strongly maintain its lead within the sector as threat from new entrants is weak and suppliers are also a weak force which provides it adequate strength to maintain a lead. The customers FB provided a lot of flexibility in the sense that they are able to easily shift between companies offering online advertisements, as it offers them the largest exposure true its extensive users worldwide, it has great barganing power. The immediate need for Facebook is to focus on strategies that maintain and increase customer satisfaction of both users and customers on its website and mobile app. This can help increase FB's major strength of having the largest worldwide user base by retaining users and attracting sufficient new users.

Competitive rivalry faced by Facebook there are very small number of companies offering online advertising services that too on par with FB. This is largely due to a vast number of users and hence the wide outreach that Facebook can provide to an individual. The variety of such firms is also very moderate making switching of customers from Facebook to other options easy only in the case of the switching costs, being low which is the only strong force existing within the competition.

Barganing Power is a strong force for Facebook's customers or buyers based on analysis. This is because advertiser's provide major source of river news for the company and substitute such as various advertisement media easily available the major buffer provided here is the current demand for online advertisement and the requirement for all major advertisers to shift to this medium of advertisement.

The bargaining power of Facebook's suppliers on the other hand is a weak force. The external factors that influence dispose is the input suppliers in the form of servers and all related computing in networking equipment and Technology and some office supplies. Considering that Facebook is a large buyer and lot of suppliers exist it tends to have a very positive barganing Park and hence this is a weak force.

The rate of substitution is a strong force for Facebook as availability of substitutes is hai especially television advertising but substitution from this media is effectively controlled through competitive pricing as advertising on television can be very expensive. The five forces analysis of Facebook clearly shows that rate of substitution should be one of the major focuses strategy formulation and all future goals and their achievement.

Even though Facebook has to constantly counter the negative effects of new entrants within the industry its early entry into the segment and a loyal and constantly growing, huge user base ensures it has the ability to offer advertisers the largest exposure. It has become a brand within the sector with the very loyal following which presently seems difficult to achieve for competition. Based on this segment of the five forces analysis, we can conclude that you and friends within this sector are a weak force for Facebook.