Strengths And Weaknesses Of Porter's Five Forces

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3. Using real cases, analyze the strengths and weaknesses of Porter’s Six Forces model in helping companies make business strategy.
The basic idea of competitive forces start with notion that competition is looked at narrowly by managers and six forces say that yes you competing with the direct competitors but you are also in a fight for profits with a broader extended set of competitors, customers who can have bargaining power, suppliers who can have bargaining power, threat of entrants who can come in and grab a piece of the action, substitute and complimentary products or services that place a constraint or the cap on the profitability and growth. Five forces is a holistic way of looking at any industry and understanding the structural underlying of profitability and competition.
So an organization use these to think about its rival makes it difficult for them, threat of substitutes means they can’t over charge, the threat of new entrants means they can’t overcharge and similar with the power of supplier and customer. There are underlying drivers of each of these forces that the model unveils and then apply them. Every industry is different and they will have a different economic fundamentals but six forces help them home in on what really causing profitability in this industry, what are the trends that are most likely to be significant in changing the game in the industry, where are the constraints on which they can relax and might allow to find a really competitive

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