An Analysis Of Porter's Five Forces Model In Business

Managing the business is difficult in small as well as big businesses. The important key feature in this business world is to evaluate the competitiveness. The managers and the entrepreneurs need to understand the business environment. One can analyze the market by using "Porter’s Five Forces analysis". The Porter’s five-forces Model analysis is related to its inventor Michael E. Porter. It was invented by him in 1979. He was born in 1947. He was professor in Harvard Business School and he has written 18 books and more than 125 Articles. Porter’s contribution in strategic management field is very important.

Porter’s five-forces model is used to determine the development of the business strategy and the extent of the competition among industries.

By analyzing the five forces acting on a company, we can determine that which company is more profitable than other companies. The important factor while determining the profitability of the company is how much money the company can create from its buyers and how much of that money can be captured by the company. The five-forces framework highlights what is important, and directs manager's towards those aspects which can be most important for long-term advantage.

“The main aim of using Porter’s five-forces analysis is to define the market size correctly. By determining and analyzing the market in such large outlook we can become more conscious about our market size competitors in future. The Fig. 1.1 shows that how different five-forces act on an industry. Different forces of Porter’s five-forces model are described below:

i. Threat of New Entry – It is easy for a new company to enter in the market, however the competition in the market is increasing so rapidly. There are many factors which can restrict the new entrants to enter the market.

ii. Suppliers Power – The companies are in pressure because of their suppliers. If anyone supplier is supplying more than 50% of the raw material to the company, than the supplier has very much power for the company. Suppliers

With Porter’s five-forces model, we can use SWOT analysis, PESTEL analysis, etc to evaluate profit of any company.

3. PORTER’S FIVE-FORCES MODEL FOR “SIEMENS WIND POWER”

Siemens Wind Power is a wind turbine manufacturer which became a separate Division of Siemens in 2011 and headquarters is established in Hamburg, Germany. Siemens Wind Power Division is a main supplier of environment-friendly, reliable, and renewable energy which is cost-efficient. Siemens Wind Power is offering solutions which is required to meet environmental needs and business needs as well. With over 27,000 megawatts of Wind Power installed, it delivers clean electrical energy all over the world.

Siemens is innovating new blade design and using new technology in generator, to boost the efficiency. Siemens created world’s first offshore Wind Power plant in Denmark in 1991. Siemen has broken the records for the world’s largest offshore Wind Power plants with London Array project which is producing 630 MW power. It is featuring 175 Siemens wind turbines of 3.6 megawatt.
Siemens key target is to decrease the price of Wind Power to make the renewable energy fully competitive energy resource.

Fig 1.3 –Offshore Wind Power plant