Question

Use Porter's Five Forces Framework to evaluate the viability of entering an industry described in an APA cited peer-reviewed article. No more than 150 words.

Answer 1

Porter's Five forces model: This model studies five forces, strength and weakness of an industry. It is used to determine corporate strategy.

Five forces are- As following:

1. Competition in the industry- This includes the number of competitors in an industry and their competitive advantage. If there is less competition in the industry, company's sales and profit will increase. If the number of competitors are more, company has to operate on low margins.
2. Potential of new entrants in the industry- A company's power is also affected by the new entrants in the market. If there is less barriers in entry in the industry then it can give tough competition to the existing players in the market.
3. Power of suppliers- Suppliers have power when they are few in numbers in a particular industry and they can increase the prices easily. It also determines, what and which quality product and service they are providing and how expensive, it would be to switch from one supplier to another.
4. Power of customers- How many customers are there and how much quantity, they buy at a time. How much it would cost to a customer to switch one company to another. If a company has good client base, it holds more power in the industry.
5. Threat of substitute products- There is always some or the other substitute products in the market. A customer may find a different way to do the work comparatively what a company is doing.

Conclusion: Understanding Porter's five forces and application of the same, enables a company to make new business strategies to succeed.