Porter's Five Forces Model Essay

Quiz-4
Part A (maximum 2 paragraphs)
• Pick a strategy framework that is widely used (you may pick one from those mentioned earlier.)
• Provide a brief description of the components, or a diagram, of the framework.
• Briefly describe underlying assumptions of the framework (economic/ cognitive/statistical…)

Stratergy Framework --->Porter’s Five Forces Model-:
Introduced Porter 's 5 Forces Model. The Porter 's Five Forces strategy framework helps understand where power lies in the business. It not only helps us understand the current position but also the position of the future. By understanding where power lies we can make benefit of the strength, boost situation of weakness and take better decisions. All this helps in planning. Generally, it is

That segment is more attractive which has high entry barriers and low exit barriers. Some new firms enter into industry and low performing companies leave the market easily. When both entry and exit barriers are high then profit margin is also high but companies face more risk because poor performance companies stay in and fight it out. When these barriers are low then firms easily enter and exit the industry, profit is low. The worst condition is when entry barriers are low and exit barriers are high then in good times firms enter and it become very difficult to exit in bad times. (www.notesdesk.com)
3. Industry Rivalry
Industry rivalry mean the intensity of competition among the existing competitors in the market. Intensity of rivalry depends on the number of competitors and their capabilities. Industry rivalry is high when:
• There are number of small or equal competitors and less when there’s a clear market leader.
• Customers have low switching costs
• Industry is growing
• Exit barriers are high and rivals stay and compete
• Fixed cost are high resulting huge production and reduction in