Analyzing And Applying Michael Porter's Five Forces Model
Question one. The environment where organizations are in a complex, quick change and at the same time competition is very strong. Each organization begins its activities with a clear mission and certain goals. Most of researchers found out that external environment of organizations are changing quickly. Therefore, organizations need to develop their strategies in order to do their work by effective and efficient way. External environment includes all factors which are outside of the organization but related to the organization. Organization managers need to analyze the change in the external environment continuously to maintain the competitive advantage of organization and at the same time to know opportunities and threats on the organization. The external …show more content…
Michael Porter identify five competitive forces:
1. The threat of new entrants.
2. Rivalry among existing firms.
3. The bargaining power of buyers.
4. The bargaining power of suppliers.
5. The treat of substitute products or services. Managers use five forces model to analyze the competition within a specific industry. It is effective tool that assess about deal with suppliers, serve customers, worry about current and potential competitors, and threat of new substitute products. The model is simple and logical to use. Manager should select the strategy after analyze the five forces model to success their organizations(Bakhru, 2010).
According to Wal-Mart, we can implement five forces model on it as follow:
1. The threat of new entrants:(Medium)
*High capital needs.
*Customers look low prices and standard quality products .
2. Rivalry among existing firms: (High)
* Industry growth is slow.
* Wal-Mart represents the 25% share of the U.S. Supermarket business.
3. The bargaining power of buyers: ( Low)
* Big number of customers
* Wal-Mart’s main customers are individuals.
4. The bargaining power of suppliers:
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