Last Updated 08 Apr 2020

Porter`s Five Forces Critique Essay

Category Essay Examples
Essay type Research
Words 360 (1 pages)
Views 180

Porter’s 5 forces summary According to Porter, in order to achieve competitive advantage over its competitors, analysis of current industry structure is vital because the structure of an industry determines the nature of the competition and the form that a sustainable competitive advantage takes and the industry structure is determined by the five competitive forces; the treat of substitute, the treat of entry, bargaining power of buyer, and bargaining power of supplier and the intensive of rivalry. Porter work simplified to identify five forces and then, to select one of the generic strategies.

Last step of his framework is using the value chain from identifying and enhancing the business activities. His concept is based on the idea that forces facing the industry play a key role in determining success and profitability of an organisation. The analysis of five forces tells how management should respond to and try to influence those forces in a favourable way. Threat of entrants: according to Porter new entry into the industry certainly reduces the existing firm’s profitability. How high the entry barrier of the industry affects the degree of new entry:

Simply, internet banking dramatically lowers the entry barrier of bank industry. It is because entry barriers such as ‘economics of scale’, ‘brand identity’ and ‘access to distribution’ do not work any longer. Physical size can only mean high operating cost as well as in efficient and limited degrees of flexibility. The banking market is likely to see the emergence of new small banks that use internet to compete on equal ground with the financial giants. Power of buyer: buyer power affects the prices that firms can charge.

Don't use plagiarized sources. Get Your Custom Essay on

Porter`s Five Forces Critique Essay

just from $13,9 / page

get custom paper

Porter theorised that the more products that become standardised or undifferentiated, and hence more power is yielded to buyers. The products of banking market are getting similar therefore it increases the bargaining power of buyers. Also, buyers have full information on demand and cost with internet, it implies that they can play the game more rationally with significant bargaining power. As more new comers are expected to enter the industry, banking customer are facing more alternatives. This is evidenced by the fact that internet banking services are now free of charge.

Remember. This is just a sample.
You can get your custom paper from our expert writers

get custom paper

Cite this page

Porter`s Five Forces Critique Essay. (2017, Apr 14). Retrieved from

Not Finding What You Need?

Search for essay samples now

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Your Deadline is Too Short?  Let Professional Writer Help You

Get Help From Writers