model or idea of the Five Competitive
Forces is created by Michael E. Porter in
1980. His book is describing everything in details which called “Competitive Strategy:
Techniques for Analysing Industries and Competitors”. Meanwhile, it has become a magnificent means for
analyzing and examining an planning
industry structure in strategic processes.
type is founded on the vision that a company strategy ought meet the chances
and threats in the organization’s outside
environment. Especially, the competitive
strategy must depend on and comprehension
of industry structures and the method they alter.
Five reasonable forces that form all industry and
market have been established by Porter. These
Forces decide the strength of competition or rivalry and thus the profitability which is the capability and power of a business to gain
a profit and attractiveness of an
industry. The organization approach’s aim ought to change these competing
forces in a method that improve of the organization. The analysis of the driving forces in an
industry is supported by Porter’s model. According to the data obtained from the
Five Forces Analysis, the administration
can determinate how to impact or exploit specific
features of their industry.
The effects of Porter’s Five forces model :
1- Affect an
agency’s ability to make a profit.
2- Arbitrate the competitive intensity.
3- Affect the overall profitability of the industry.
are five forces that act on any product, brand,
and agency :
1- The threat of new competitor or entrants :
competitors can enter from any industry
which made the competition so higher and easier for other agencies to enter this industry. There is constantly force for reaction and adjustment to
the competitors every day In such state,
the new players may able to change the main
items of the market environment
for example prices, customer loyalty and
2- The threat of substitutes :
Availability of new products in the market
make the customers switch to an alternative.
Also, the threat
of substitutes arises when buyers are
able to find better products at a lesser price.
it might be when the buyers find a new product due to the unavailability or
poor quality of the existing products.
3- Power of customers:
power of customers determines how much
customers can impose pressure on the prices .it is for buyers to drive prices
down. This is driven by the number of buyers in the market.
4- Power of suppliers:
suppliers contains all sources for inputs that are wanted in order
to offer merchandise or services
All the four forces may come together to produce this force. This
force depicts the strength of competition
between the current companies in a
industry. So, high competitive pressure
the outcome in pressure on values and therefore on profitability for each company in the industry.
Example of Porter’s five
forces model “Etisalat”:
We live in a global world that
require to follow the new trend of technologic . So, there are too many
agencies that offers easy way of lifestyle. One of them is Etisalat . Etisalat
is an old company in UAE which considered as one of the biggest telecommunication
companies . It was formed in 1976 and has been
providing communication services to the Arabian gulf . It has been different
branch in more than 18 international nations beginning from Pakistan in
Asia to Nigeria. At this time, the organization offers a widespread range of dissimilar
style of services from landline telephones to mobile telephones, television
channels, internet etc.