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Porter's Five Forces & Macro-economic Forces

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1. Do you think that Porter's Five Forces is a comprehensive tool for industry analysis? What do you see as the major limitations of this analytical tool? Porter's 5 Forces link: http://www.themanager.org/models/p5f.htm

2. Since macro-environmental forces apply to almost every industry simultaneously, which force do you think is having the most dramatic and overarching effect on business today? Provide a rationale for your opinion. This is the link to Macro Environment Analysis: http://www.whatmakesagoodleader.com/macro-environment-analysis.html

3. How often do you think organizations perform a formal analysis of their resources and capabilities? Provide a rationale for your opinion.

4. What percentage of organizations do you believe really understand (thoroughly) what resources and capabilities they own, which they need to develop or acquire, and how they should effectively deploy those resources and capabilities? Provide a rationale for your opinion.

Grant, R. M. (2013). Contemporary Strategy Analysis. (8th ed). Hoboken, NJ. John Wiley & Sons Ltd.

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Solution Summary

This detailed solution discusses Porter's Five Forces, the most important macro-environment force and why, how often organizations perform formal analysis of their resources, and the amount organizations understand their abilities and resources. Includes APA formatted references.

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1. Do you think that Porter's Five Forces is a comprehensive tool for industry analysis? What do you see as the major limitations of this analytical tool? Porter's 5 Forces link: http://www.themanager.org/models/p5f.htm

Porter's Five Forces is a good start for industry analysis because it helps to look at the threats of new entrants and substitutes, the bargaining power of suppliers and customers, and their impact on competitive rivalry within an industry in a strategic manner. Opponents to the model point out that in the 21st century the world is moving at a faster pace and is more intertwined and complex than when Porter introduced this model. In order to continue to use Porter's Five Forces one would need to make continual updates. In addition, while providing a snapshot of the current situation, the model does not provide meaningful information about how best to take preventive actions. In addition, many companies are competing with others who are involved in different venues of trade. Consider Apple. Are they a computer company? Or a music company? Or perhaps, a phone or book company? How does a company in any of these sectors weigh the opportunities and threats Apple presents?
Another critique of Porter's model is the need for organizations to respond to more than just market forces. For instance, organizations must be aware of government legislation and social responsibility. Further, strategic alliances can play a part in an organization's success (again, consider Apple and their ability to gain market share through development of apps and increased music offerings in iTunes). The market is less static ...

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