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Assignment: An Analysis Of Porter's Five Forces Model Strategy

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ASSIGNMENT APT 3083
STRATEGIC ENTREPRENEURSHIP

NAME: AMY SULIEYANA BINTI ABDULLAH (F13A028)
GROUP: FIAT2_2
TITLE OF ASSIGNMENT: PORTER’S FIVE FORCES MODEL STRATEGY
LECTURER’S NAME: MADAM FADHILAHANIM ARYANI BINTI ABDULLAH
DATE OF SUBMISSION: 28 DECEMBER 2015

INTRODUCTION
What is Porter’s five forces model strategy? The five forces model was developed by Michael E. Porter to help companies assess the nature of an industry’s competitiveness and develop corporate strategies accordingly. The framework allows a business to identify and analyze the important forces that determine the profitability of an industry. (Martin, 2014) Porter’s five forces model is an analysis tool that uses five industry forces to determine the intensity of competition …show more content…

A limited number of strong buyers may be able to exert significant control over a seller. In addition, if a product is similar to its competitor with little or no differentiation, then there are chances that the company may need to let the supplier dictate terms in order to avoid losing the customer.

4. Bargaining power of suppliers
Suppliers provide the raw material needed to provide a good or service. This means that there is usually a need to maintain strong steady relationships with suppliers. Depending on the industry dynamics, suppliers may be in the position to dictate terms, set prices and determine availability timelines. Powerful suppliers may be able to increase costs without affecting their own sales volume or reduce quantities that they sell.
When do suppliers have power?
Supplier may enjoy more power if there are less of them. Costs of switching to an alternate are high, or there are no alternates. A supplier may also be the only provider of a certain raw material. This may be the case in instances where a supplier holds a patent or have proprietary knowledge. Because of a lack of alternates, they may be able to withhold quantities or increase prices without losing …show more content…

Complements increase the demand of the primary product with which they are used, thus, increasing firm’s and industry’s profit potential. For examples, iTunes was created to complement iPod and added value for both products. As a result, both iTunes and iPod sales increased, increasing Apple’s profits.
Through game theory, Adam Brandenburger and Barry Nalebuff of Yale, added a new concept to the Porter’s five forces model. In the mid-1990s, they proposed the idea of complementary force which may have been termed a 6th force by Andrew Grove, former CEO Intel. These complementary forces may be the government or the public. Porter himself countered this addition to the model by the assertion that the government or public are factors that affect the five forces.

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