The Five Forces Model of Evaluating Business Segments by Michael Porter

The Five Forces Model of Evaluating Business Segments by Michael Porter

Length: 1205 words (3.4 double-spaced pages)

Rating: Strong Essays

Open Document

Essay Preview

Companies make decisions all the time. Sometimes if the company is a big one, then the decisions are usually big ones too. One of these large decisions is the choice of if a company should enter into a new business segment or not. There is a very useful theory by Michael Porter who developed the Five Forces Model of Evaluating Business Segments. (Batlzan,Detlor,Welsh 2012) In today’s business top managers need structure when making decisions and this helps, but they also need accurate and up to date information from all parts of the business process. From suppliers, logistics, competitors, the industry and of course customers there must be information available to help make those decisions and they use business information systems to help with this. If it is big business or small they can benefit from using information systems. (
This paper will focus on the details of the Michael Porter’s model and how information systems help in the five force process. These forces are buyer power, supplier power, threat of substitute products or services, threat of new entrants and rivalry among existing competitors. The concept of these forces is that they influence how managers make the big decision to enter into a new market. If the forces show that the situation is too negative then the company might make a good decision and not go into this market and save a lot of money and problems.
Buyer power means how many choices customers have a lot of choice where they are going to shop. If there are too many choices for buyers then they can just shop other places and competition might be very strong. Supplier power is also important. This means that if there are not enough suppliers then those small amount of suppliers can control th...

... middle of paper ...

3. Davoren (2014), The Three Fundamental Roles of Information Systems in Business, Demand Media; retrieved from
4. Reiner K, Cegielski C (2011). Introduction to Information Systems, Supporting and Transforming Businesses (3rd ed) Maine, United States. John Wiley and Sons Inc.
5. Lundberg A.(2002), Wal-Mart:IT Inside the World’s Biggest Company,
Retrieved from
6. O’leary C, Rao S, Chad P (2004)Improving customer relationship management through database/Internet marketing: A theory-building action research project; European Journal of Marketing p.338-354 Retrieved from:

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Analysis Of Michael Porter 's Five Forces Model Essay

- Introduction Myra opened UMUC Haircuts in 1995 but has recently become aware of an increase in competition from numerous competitors. Lately, there has been news of a Hair Cuttery opening up within five miles making Myra anxious about how it might effect her business. She hopes her salon is able to remain and increase revenue by developing some aspect of her business. Five Forces Analysis The Five Forces Model, developed in 1979 by Michael Porter, is a useful business resource. It allows a business to determine if it can be profitable based on the industry and other competitors, in this case the competitor being Hair Cuttery....   [tags: Strategic management, Porter five forces analysis]

Strong Essays
737 words (2.1 pages)

Porter 's Five Forces Model Essay

- 1. Describe Michael Porter’s model and its components. Pick an industry and describe how the different components of the model relate to the industry. Porter 's Five Forces model, it named after Michael E. Porter. He identifies and analyzes five competitive forces that structure every industry, helps to determine an industry 's weaknesses and strengths. There are five components of Porter 's five forces model i. Potential of new entry into the industry ii. Rivalry among existing firms iii....   [tags: Strategic management, Porter five forces analysis]

Strong Essays
1090 words (3.1 pages)

Five Forces Model Essay

- Professor Michael Porter of the Harvard Business School developed a framework that aids in the development of an organizations competitive advantage. Porter identified five basic forces that act on the organization; I. The bargaining power of suppliers; II. The bargaining power of buyers; III. The threat of potential new entrants; IV. The threat of substitutes; V. The extent of competitive rivalry. The bargaining power of suppliers. Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services....   [tags: Competetive Advantage Michael Porter Five Forces]

Strong Essays
1485 words (4.2 pages)

Essay about Groupon's Busness Model

- I. Introduction The term business model gained popularity due to “the explosive growth of new ventures sparked by the internet”1 and is often erroneously used “to glorify all manner of half-baked plans”.2 Strategy is another “buzzword” that is often mistakenly used interchangeably with business model. There are numerous differences between the two but the defining characteristic is that a “business model is independent of competitors and the current state of the market”,3 focusing inwardly to describe, “as a system, how the pieces of a business fit together”.2 Strategy focuses on performance, looking outwardly at the industry, analyzing the current competition, future competition, supplie...   [tags: Business Model, Internet, Strategy]

Strong Essays
1051 words (3 pages)

Essay on The Limitations of Porter’s Six Forces Model in Industry

- Managers and strategists are often faced with a dilemma while trying to understand the determinants of profitability of industries they compete in as well as potential industries they may wish to compete. To this effect, several analytical frameworks are employed; the most widely used being the Porter’s Six Forces model. This paper seeks to bring to light the shortcomings of using the Porter’s Six Forces model as an analytical framework to determine which industries are profitable or not. Until the introduction of a “sixth force” in the mid-nineties, the “Porter’s Five Forces Model” as it was originally developed by Michael E....   [tags: structure, attractiveness, business management]

Strong Essays
1271 words (3.6 pages)

Discussing Optus' Competitive Market Position by Using Porter's Five Forces Model

- Discuss Optus' competitive market position by using Porter's Five Forces Model This essay will discuss Optus’ competitive market position through the analysis of Porters Five Forces Model. Optus, Australia's second largest telecommunications company is situated in a constantly changing environment, easily illustrated by Porters Model. Introduction of Porters Five Forces Model Porters Five forces model is an analytical tool developed by Michael E. Porter in 1979 whilst he was studying at Harvard Business School....   [tags: telecomunications company, business analysis]

Strong Essays
1765 words (5 pages)

Essay Analysis Of Porter 's Five Forces Model

- 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 competi...   [tags: Strategic management, Management, Marketing]

Strong Essays
1056 words (3 pages)

Essay on Michael E. Porter's Five Forces In Pepsi

-     Introduction The model of the Five Competitive Forces was developed by Michael E. Porter in his book "Competitive Strategy: Techniques for Analyzing Industries and Competitors" in 1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes.   Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change....   [tags: Business Strategy]

Free Essays
1756 words (5 pages)

Mcdonalds Porters Five Forces Model Essays

- Analysing McDonalds (fast food outlets) using Porters 5 Forces model – sometimes called the Competitive Forces model. Introduction McDonalds Canada opened in 1967, thirteen years after McDonalds had taken the United States by storm. This was the first restaurant to be opened outside of the United States. It was in 1965 that McDonalds went public and offered shares on Wall Street. Since then it has been important for McDonalds to continually monitor its performance, to make sure it is competitive and profitable while also being aware of its immediate community responsibilities....   [tags: Strategic Management]

Strong Essays
1194 words (3.4 pages)

Five Forces Framework Essay

- Michael Porter's five forces model is a strategic framework by which an attempt is made to predict how an industry, behaves, grows and responds within a competitive environment. In his own words the creator of the concept offers an insight; "The five forces determine the industries profitability because they influence the prices, costs, and required investments of firms in an industry – the elements of return on investments ." It is the aim of this essay to apply Porter's model to Europe's rapidly growing budget airline industry....   [tags: Business Industry Market Analysis]

Free Essays
793 words (2.3 pages)