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A graphical representation of Porter's five forces. Porter's Five Forces Framework is a method of analysing the competitive environment of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack thereof) of an industry in terms of its profitability.
Michael Eugene Porter (born May 23, 1947) [2] is an American businessman and professor at Harvard Business School.He was one of the founders of the consulting firm The Monitor Group (now part of Deloitte) and FSG, a social impact consultancy.
Michael Porter described an industry as having multiple segments that can be targeted by a firm. The breadth of its targeting refers to the competitive scope of the business. Porter defined two types of competitive advantage: lower cost or differentiation relative to its rivals. Achieving competitive advantage results from a firm's ability to ...
In this model, four attributes are taken into consideration: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. According to Michael Porter, the model's creator, "These determinants create the national environment in which companies are born and learn how to compete." [1]
Michael E. Porter and Claas van der Linde, "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, Vol. 9, No. 4 (Autumn, 1995), pp. 97–118 . Michael E. Porter and Claas van der Linde, "Green and Competitive" Harvard Business Review (Sept-October 1995), p 120–134.
Porter's four corners model is a predictive tool designed by Michael Porter that helps in determining a competitor's course of action. Unlike other predictive models which predominantly rely on a firm's current strategy and capabilities to determine future strategy, Porter's model additionally calls for an understanding of what motivates the competitor.
[1] [2] The model is an extension of the Porter's five forces model proposed by Michael Porter in his 1979 article published in the Harvard Business Review "How Competitive Forces Shape Strategy". The sixth force was proposed in the mid-1990s. [3]
According to Porter, in the modern global economy, comparative advantage, whereby certain locations have special endowments (i.e., harbor, cheap labor) helping them overcome heavy input costs, has become less relevant. Now, competitive advantage, in which companies make productive use of inputs, requiring continual innovation, is more important ...