Κυριακή, 27 Φεβρουαρίου 2011

Porter's 5(+1) forces

Porter's 5 Forces is a generic framework formed by Michael E. Porter in 1979. It tries to represent all the general aspects that any company should continually examine. Those forces are:
1) The bargaining power of the Customers, which could lead the company to lower or increase the prices.
2) The bargaining power of the Supplier, which could increase or decrease the production cost.
3) Threat of new entrants, who could change the whole industry or at least earn a piece of the market.
4) Threat of substitute products, that customers could use as replacement of what your company produces. [It looks like being the same as [1], but it is more specific]
5) Competitive rivalry within an industry, which are your direct competitors.
And the bonus force is
6) Complementarity. It is a new trend, nowadays we do not just produce products, but it is possible to create products that participate to or establish some platform. For instance iPhone is not just another product, it is a platform that has been used from several companies which have either implemented Apps or accessories for the iPhone device.

References:

1) Porter five forces analysis - Wikipedia
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