Coke Porter's Five Forces

These five forces shape industry so the forces will be intense if the companies are comparable and will not be able to gain the attractive return on the investment while there will be a good profit for the company if these forces of the company not posing any serious threat like “Coke”. An industry’s formation is more about what makes profit for the specific industry and it helps to achieve the completive advantage. The analysis of an industry is a very important step in order to make a good strategic positioning and the main step for any industry is to align these strategies with the company’s competitive forces because the industry structure in the long run is helpful in gaining profitability. In this article, the profit structure of an industry

The function performed by the substitute is same as an industry’s product by a different means; mostly this threat of a substitute is indirect. As in the movie theater industry the procreation of the substitute is important. In the strategy formulation the most important part which needs to be considered while making any strategy is focus the strong competitive force. The threat of a substitute is more if it proposes an attractive trade off to the industry’s product or if the competitor’s analysis done by the other industry is weak.

The fifth force is the “Rivalry among competitors”. Rivalry is very active in the commodity industry and there is zero impact of this on the profitability of an industry whereas the factor affecting the profitability is the superior substitute. For example Kodak and Fuji faced these threats. Rivalry gives the benefits when the price competition passes on directly from the industry to its customers. The main point discussed in this force is the zero-sum competition; which is when the competitor fulfills the same needs. And the positive-sum is opposite to it, when the companies compete on different

Usually, this model is used to identify whether the business have the potential to earn more profit with the differentiated product, services and the balance of power. This article also explains why a fast growing company is not always profitable and how the mergers can reduce the potential profit of any industry. It also describes the governmental policies and the use of these forces in understanding the complements. Industry analysis is the main tool in order to understand this model. Five forces analysis also helps industry to understand the factor which is affecting the profitability in a specific industry and helps in decision making; whether to enter a specific industry, or to increase capacity and developing competitive