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Porter's five forces model has several limitations. Firstly, it does not account for the impact of ideation and brainstorming in identifying potential problems and risks . Secondly, the model assumes a static industry structure and does not consider the dynamic nature of industries, especially in the context of globalization, deregulation, and digitalization . Additionally, the model focuses primarily on external factors and does not adequately address internal factors such as organizational capabilities and resources . Furthermore, the model may not be suitable for industries with unique characteristics, such as the electricity sector, where strategies are highly influenced by external competitive settings and little innovation is observed . Lastly, the model does not provide a comprehensive framework for assessing industry attractiveness and profit potential, as it only considers five specific forces .
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What are the strengths of the five forces model?5 answersThe strengths of the five forces model include its dominance in industry analysis and its wide coverage in strategic management textbooks. It provides a framework for analyzing the competitive intensity and profitability of an industry by considering five key forces: threat of new entrants, threat of substitutes, power of customers, power of suppliers, and extent of rivalry. These forces help identify potential competitive advantages and determine industry attractiveness and profit potential. The model has been used to analyze various industries such as Airbnb in the tourism accommodation sector, the wind power industry in India, and the smartphone industry in Bangladesh. The model's importance in strategic management is highlighted, and efforts have been made to improve its analytical power through approaches like the analytic network process (ANP).Why are Porter's five forces difficult to operationalize?5 answersPorter's five forces model is difficult to operationalize due to its deceptively simple nature and the nuances that students struggle to fully understand. The model requires evaluating external conditions that impact firms in a given industry, which can be complex and challenging to assess accurately. Additionally, the model does not provide clear guidelines on how to measure and quantify the different forces, making it subjective and open to interpretation. Furthermore, the model does not account for all relevant factors that may impact industry profitability, such as governmental interventions and support by complementary goods. This lack of comprehensive coverage limits the model's effectiveness in capturing the full complexity of industry dynamics. Overall, the difficulty in operationalizing Porter's five forces model lies in its simplicity, subjectivity, and limited scope, which can make it challenging to apply effectively in practice.How do Michael Porter's five forces interact with each other?4 answersMichael Porter's five forces interact with each other to determine the competitive intensity and profitability of an industry. These forces include the threat of new entrants, the threat of substitutes, the power of customers, the power of suppliers, and the extent of rivalization. Each force can reduce potential competitive advantage and threaten a firm's profitability. The totality of these forces determines industry attractiveness and profit potential. For example, in the smartphone industry, market segmentation is used to strategically deal with competition from direct and indirect competitors, such as influential customers, influential suppliers, new entrants, and substitute products. In the homebuilding market, the competitive rivalry is the biggest force, followed by buyer power, supplier power, threat of new entrants, and threat of substitute products. In the bakery sector, only one force is perceived to have a strong presence, while the others have a timid performance.Amazon Porter's Five Forces Analysis5 answersAmazon.com has been analyzed using Porter's Five Forces model in several papers. The analysis focuses on various factors that affect Amazon's operations, including changes in consumer demand and competition in the e-commerce market. The study also explores the factors that have contributed to Amazon's success as an online shopping platform, such as innovation, customer service, and diversification. Additionally, the model of Porter's Five Forces has been used to provide input and strategies for small and medium businesses (SMEs) to create a competitive advantage in the face of challenges. However, one paper argues that the Porter framework may not be applicable to nonprofits, including religious nonprofit organizations, due to the stronger influence of mission in strategy formulation. Overall, the analysis of Amazon's internal and external environments using Porter's Five Forces model has provided insights into the company's strengths, weaknesses, and opportunities.
