The five competitive forces formulated by Michael Porter
amplify the theory’s implication of the effect of environmental factors that
will distress the internal operation of the business. The forces that will affect a given business
organization are the suppliers, buyers, substitute products, potential entrants
of the same type of business, and the rivalry of the existing firms present in
the market area.
Many business researchers are using the theory of Michael
Porter knowing that the theory implied by Porter is general applicable and
useful in almost any kind of business.
If you will vividly observe the concept of the five forces theory, the
presence of the whole supply chain or the overall stakeholder of the business
organization is present in the five forces theory.
Indeed, we can observe that the defined
terminologies being used in the theory (like potential entrants) are all the
possible events that will happen along the supply chain as the business
operations are being executed by the whole stakeholders involved. Certainly, Porters theory can be easily
related to the theory of the Value Chain.
Value Chain on the other hand is the added value to the raw
product acquired by the company through the firm infrastructure, human resource
management, technology development, and procurement. Many of the scientific marketing researchers
of today are buying the concept of the unique combination of the two theories
for the success of the business organization’s operation.
Five Forces Theory of Michael Porter
Creating Value
Comments