Analysis Of Porter 's Five Forces Model

1056 Words5 Pages
In this millennia, there are a lot of emerging businesses with many pros and cons of it. One of the main advantages for consumers is that they would have a lot of choice. The downside of having numerous emerging businesses is the competition of an industry would be stiffer. Therefore, Michael Porter, a professor based currently at Harvard Business School, has developed a universal strategy for any businesses which is known as Porter’s Generic Strategies. (Harvard Business School, n.d.) Porter’s Generic Strategies come after Porter’s Five Forces model which is introduced to help a business understands their situation and it is useful to recognize a business’ strength about the current competitive position. (MindTools, n.d.) The strategies are divided into 3 sections which is cost leadership, differentiation and focus. The focus section is then divided into smaller segments which are narrow and broad. (MindTools, n.d.) Porter’s Generic Strategies are as follows: 1. The Cost Leadership Plan The core objective of this plan is to minimize the cost that an organization has to pay in order to deliver their products and services. It is not about the amount of money the customers have to pay. Being one of the lowest-cost producers is not enough as other organizations could be undercut the cost. Before choosing this plan, an organization has to make sure that they could be in the number one position and maintain it. There are a few factors why some companies manage to use this plan successfully. i. They have the ability to get the required capital so they can invest in technology that will lower the cost. ii. Their logistic system is well-organized. iii. They have a low cost base which means that they don’t have to pay a lot of m... ... middle of paper ... ...a new supplier that could provide a cheaper raw materials. With that, I will always be one step ahead or at least on par with my competitors. In conclusion, competitive advantage could be gained by applying the right strategy. Porter’s Generic Strategy is one of the tools that is beneficial and convenient for the business in order to determine what strategy should be used. Using the right strategy is useful in order to gain market share or to increase profit. References Harvard Business School. (n.d.). About Micheal Porter. Retrieved from isc.hbs.edu: http://www.isc.hbs.edu/about-michael-porter/Pages/default.aspx MindTools. (n.d.). Porter 's Five Forces. Retrieved from mindtool.com: http://www.mindtools.com/pages/articles/newTMC_08.htm MindTools. (n.d.). Porter 's Generic Strategies. Retrieved from Mindtools.com: http://www.mindtools.com/pages/article/newSTR_82.htm
Open Document