INDIAN BUSINESS ENVIRONMENT

Presented by : Sajith kumar.k 3rd sem MBA PIMS Munnad

TOPIC :

MICHAEL PORTERS FIVE FORCE MODEL

INTRODUCTION
American Michael Porter was born in 1947

Michael Porter's innovative research in the 1980's changed managers' perceptions of their own industry's importance as a factor for their company's strategy.
Porter focused on private policy rather than on public policy, that is, how to maximize profits.

Business unit managers would now have to study their industry's characteristics since an industry's structure determines its relative economic attractiveness

 How Competitive Forces Shape Strategy first Harvard Business

Review article and it started a revolution in the strategy field

It is a framework for the industry analysis and business strategy development Industry as being influenced by five forces Forces determine the competitive intensity and therefore attractiveness of a market (Attractiveness in this context refers to the overall industry profitability) The strategic business manager seeking to develop an edge over rival firms

can use this model to better understand the industry context in which the
firm operates

PORTER'S FIVE FORCES

1. Entry of competitors
assessing the ability of new entrants to start operations and the structural barriers they must overcome
Government policy Patents and proprietary knowledge serve to restrict entry into

an industry
Asset specificity inhibits entry into an industry Access to distribution channels Access to distribution inputs

2. Threat of substitutes
assessing the ability of new products with superior characteristics to replace existing product(s) or service(s);

3. Bargaining power of buyers

assessing the relative strength and number of buyers;*

Buyer Volume
Buyer information Brand identity Price sensitivity Product differentiation

Substitutes available
Buyers incentives

4. Bargaining power of suppliers

assessing the relative strength and number of sellers;*

Supplier concentration
Importance of volume to supplier Differentiation of inputs Switching costs of firms in the industry Threat of forward integration Impact of inputs on cost or differentiation

5. Rivalry among the existing players

assessing the relative competitive strength of rival firms.

Exit barriers
Industry concentration Fixed Costs Industry Growth Product differences Brand Identity Diversity of rivals

Porter is also particularly recognised for his competitive

'diamond' model, used for assessing relative competitive strength of nations, and by implication their industries: Factor Conditions: production factors required for a given industry, eg., skilled labour, logistics and infrastructure.

Demand Conditions: extent and nature of demand within the nation concerned

for the product or service.

Related Industries:
the existence, extent and international competitive strength of other industries in the nation concerned that support or assist the industry in question.

Corporate Strategy, Structure and Rivalry:

the conditions in the home market that affect how corporations are created, managed and grown; the idea being that firms that have to fight hard in their home market are more likely to be able to succeed in international markets

CONCLUSION

THANK YOU..