QUESTION

1.Prepare a 2,500 word report on Porter’s Five Forces Framework. With the aid of clearly drawn diagram explain the key elements of Porter’s Five Forces Framework.

1.What are the principal benefits and challenges in using this framework to inform strategy? Your report must be structured as follows: · Purpose (2 marks) ·Background (3 marks) ·Porter’s Five Forces Framework o Diagram (2 marks) o Components (10 marks) o Advantages and challenges (8 marks) · Discussion (5 marks) · Conclusion (5 marks). Five (5) additional marks will be allocated to English expression and grammar. Tips for preparing your report: ·

3.Define your terms; · Clearly explain the concepts

                                                            SAMPLE SOLUTION

The purpose of this report is to examine in detail Porter’s five forces model for determining the level of competition within a particular industry as well as the expected profitability within the same industry. The paper examines the different components within the model including the role played by each component in determining the competition within a particular market. The paper digs deeper into the advantages and disadvantages of each of the five forces of competition and how the forces affect the profitability of firms within a specific industry. It is the author’s hope that this paper shall prove useful to firms looking to enter into new markets and shall serve the said firms in measuring the level of competition within particular industries as well as the barriers to entry and the expected profitability of the firm. The report can also be useful to firms that are already in a market as it can help such firms to gain a better understanding of their specific industries and how to utilize the five forces to their advantage (Grundy, 2006). The paper can also be used as an academic resource by other students who want to gain a deeper understanding of Porter’s five forces model.

Background

The Five Forces model was developed by Michael Porter in1979 to help companies assess the competitiveness of their respective industries in order to create appropriate corporate strategies to beat the competition. The model examines five crucial factors that can be used to determine whether a business venture will be successful in a particular industry and what needs to be done to make the business a success. The model measures the attractiveness of a particular industry to a firm based on forces that might impact the profitability of the firm within the industry. These factors include the ability of other firms to enter into the market and raise competition within a certain niche as well as the easy availability of substitutes within the same market. The market forces also include the bargaining power of buyers and sellers, which have a direct impact on the profit levels within the industry. Each of the five forces within Porter’s model plays a crucial part in determining the level of competition within a particular industry and the profitability of firms within the particular industries (Hoang, 2014). Each industry has a unique structure based on the five forces model, which influences each aspect of the industry structure. To understand the structure of each industry as well as the profitability levels within a specific industry, an individual must apply the five forces model in the analysis of the industry in order to reveal the specific structure of the industry. Therefore, the five forces model is crucial to understanding the structure, competition levels and profitability of firms within a specific industry.