Porter's 5 Forces in Business Competitiveness

Business Competitiveness Management

Porter's 5 Forces

• Analytical framework to assess the competitiveness of a business
• 5 forces that shape the industry:
  1. Threat of New Entrants: Barrier to entry, economies of scale, and government policies
  2. Bargaining Power of Suppliers: Dependence on suppliers, switching costs, and supplier concentration
  3. Bargaining Power of Buyers: Buyer concentration, buyer switching costs, and buyer information
  4. Threat of Substitute Products or Services: Substitute availability, switching costs, and buyer willingness
  5. Competitive Rivalry Among Existing Competitors: Number of competitors, industry growth rate, and fixed costs

PEST Analysis

• Framework to analyze the external environment of a business
• 4 factors that affect the business:
  1. Political: Government policies, regulations, and political stability
  2. Economic: Economic growth, inflation, and interest rates
  3. Social: Demographics, consumer behavior, and cultural trends
  4. Technological: Technological advancements, innovation, and research and development

Product Life Cycle

• Stages a product goes through from introduction to withdrawal
• 4 stages:
  1. Introduction: Product launch, high investment, and low sales
  2. Growth: Increasing sales, market expansion, and competition
  3. Maturity: Stabilized sales, market saturation, and intense competition
  4. Decline: Decreasing sales, market contraction, and product withdrawal

ADL Matrix

• Tool to analyze and prioritize products or services based on their market attractiveness and business strength
• 4 quadrants:
  1. Stars: High market attractiveness, high business strength (invest and grow)
  2. Cash Cows: Low market attractiveness, high business strength (milk and maintain)
  3. Question Marks: High market attractiveness, low business strength (invest and analyze)
  4. Dogs: Low market attractiveness, low business strength (divest or eliminate)

Management Function according to H. Fayol

• 5 primary functions of management:
  1. Planning: Setting goals, objectives, and strategies
  2. Organizing: Allocating resources, assigning tasks, and structuring the organization
  3. Commanding: Directing, motivating, and influencing employees
  4. Coordinating: Integrating and aligning activities and resources
  5. Controlling: Monitoring, evaluating, and correcting performance

Business Competitiveness Management

Porter's 5 Forces

• Analyze competitiveness of a business using 5 forces that shape the industry
• Threat of New Entrants: barrier to entry, economies of scale, and government policies affect new entrants
• Bargaining Power of Suppliers: dependence on suppliers, switching costs, and supplier concentration impact supplier power
• Bargaining Power of Buyers: buyer concentration, buyer switching costs, and buyer information influence buyer power
• Threat of Substitute Products or Services: substitute availability, switching costs, and buyer willingness to substitutes affect competitors
• Competitive Rivalry Among Existing Competitors: number of competitors, industry growth rate, and fixed costs impact competition

PEST Analysis

• Analyze external environment of a business using 4 factors
• Political: government policies, regulations, and political stability affect business
• Economic: economic growth, inflation, and interest rates impact business
• Social: demographics, consumer behavior, and cultural trends influence business
• Technological: technological advancements, innovation, and research and development affect business

Product Life Cycle

• Product goes through 4 stages from introduction to withdrawal
• Introduction: product launch, high investment, and low sales
• Growth: increasing sales, market expansion, and competition
• Maturity: stabilized sales, market saturation, and intense competition
• Decline: decreasing sales, market contraction, and product withdrawal

ADL Matrix

• Analyze and prioritize products or services based on market attractiveness and business strength
• Stars: high market attractiveness, high business strength (invest and grow)
• Cash Cows: low market attractiveness, high business strength (milk and maintain)
• Question Marks: high market attractiveness, low business strength (invest and analyze)
• Dogs: low market attractiveness, low business strength (divest or eliminate)

Management Function according to H.Fayol

• 5 primary functions of management
• Planning: setting goals, objectives, and strategies
• Organizing: allocating resources, assigning tasks, and structuring the organization
• Commanding: directing, motivating, and influencing employees
• Coordinating: integrating and aligning activities and resources
• Controlling: monitoring, evaluating, and correcting performance

Assess the competitiveness of a business with Porter's 5 Forces analytical framework, including threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and competitive rivalry.