Porter's Five Forces Model Of Industry Competition

2.3 Porter’s Generic Strategies Referring to Porter (1980), Porter’s five forces model of industry competition is a framework that tries to analyse the level of competition in the industry and corporate strategy competition. First, competition in the industry means that fierce competition in the same industry leads to lower the profit potential of the company. It may lead their company profit slightly reduce. Second is potential of new entrants into industry. This is because the market produces high return, so that will attract new businesses and lead to many new entrant. Next is bargaining power of suppliers. There are suppliers of raw materials, parts, labour, and services to the company can be a source of power over

The reason to use this strategy to get succeed, the company has become a cost leader, rather than one location businesses want to achieve the position. Some of these cost way to gain access to low-cost include unique materials, outsourcing, high efficiency production, and to avoid the additional costs of resources. For example, on year 2010, Blackberry smartphone advanced from a new entrant to an industry leader to a cost leader. Differentiation strategy is focused on the design of a product or service has a unique quality because customer perception is better than a product of competitor. This allows companies to desensitize prices, and to focus on those characteristics to create value. In addition, manufacturers need to market segmentation to target goods and services for each particular segment, resulting in a higher price than the average. For instance, Apple Company produces their product such as each generation Iphone through product differentiation, innovation advertising and

Companies use this strategy has been to reduce the size, to focus on narrow market segments, and to clearly define all the resources and efforts, and have the benefit of a high degree of customer loyalty. For example, Lenovo smartphone is focused their customers’ target who wants to purchase cheaper smartphone. Porter also mentions that the company can only choose one of these company generic strategies for achieving a long-term success. Otherwise, we have tried everything achieved without, thereby creating a chaotic image and remaining “stuck in the middle”, and not to create a real competitive