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Describe each of the factors in Porter’s Five Forces Model. Summarize the four strategies of Porter’s...

  1. Describe each of the factors in Porter’s Five Forces Model.
  1. Summarize the four strategies of Porter’s model of configuration and coordination.
  1. What are Porter’s three generic strategies and how are they related to global strategy?  
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Answer #1

1.   Describe each of the factors in Porter’s Five Forces Model.

The five forces are:
1. Supplier power. Describes the ability for suppliers to drive up prices. Which can be due to uniqueness of their product or service, size and strength of the supplier; and cost of switching from one supplier to another
2. Buyer power. Describes the ability for buyers to drive prices down. Which can be due to number of buyers, importance of the buyer; and cost to the buyer of switching from one supplier to another.
3. Competitive rivalry. Describes the number and capability of competitors in the market. When all competitors, offer undifferentiated products and services, it will reduce market attractiveness.
4. Threat of substitution. Describes there are substitutes for the product or service. Where substitute products exist , it increases the likelihood of customers switching to alternatives in response to price increases.
5. Threat of new entry. Describes the entry of a new enrant ,which reduces profitability. Unless incumbents companies have strong and durable barriers to entry then profitability will decline to a competitive rate.


2.   Summarize the four strategies of Porter’s model of configuration and coordination.
The four strategies by which companies combines and configure their operations are :

1Export Based: Here the configuration will be geographically concentrated with low coordination of activities will be low. There are limited number of site and individual marketing

2Country centred :Here the configuration will be geographically dispersed with few coordinated activities . The company operates as a local firm

3High foreign investment :Here the configuration will be geographically dispersed with high level of coordinated activities . High levels of coordination between different sites is expensive.

4Purest global: Here the configuration will be Geographically concentrated with high level of coordinated activities . High levels of coordination between different sites is expensive. For example a company seeking to gain competitive advantage from its international presence

3 Porter’s three generic strategies


1 Cost Leadership Strategy:

By using this strategy the firm wins market share by appealing to cost-conscious or price-sensitive customers . They become low cost providers of a given product for the same given quality.

2 Differentiation Strategy:
By using this strategy the firm builds products/ services that offer unique capabilities that are also of value to the customer

3 Focus strategies:
This strategy is used by small companies especially for those wanting to avoid competition with big one.

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