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Industry Analysis Using Porter's Five Forces

Strategic Leadership

There is a model that was developed by Michael Porter, a Harvard professor, called Porter's Five Forces for Sustained Competitive Advantage. This model states that in order to determine the vulnerability of an industry or the strength of an industry in the market, one could apply Porter's Five Forces to the industry to determine the likelihood of success in the industry.

Porter's Five Forces are:
Rivalry of competition
Threat of substitutes
Buyer power
Supplier power
Barriers to entry

Assignment is as follows:

You are a wealthy captain of industry. Because of your good leadership and research skills, you continually seek new industries to enter, and you are quite adept at determining with great reliability whether or not you should enter an industry because you utilize Porter's Five Forces so extensively.

Find an industry other than the ones discussed in class, and research that industry to determine, based upon Porter's Five Forces, whether or not it would be viable to enter that industry. Explain each of the five forces as they apply to the industry in question, and explain your findings. Please do not select an industry that is the same as your classmates. Remember that you are not comparing an organization to the forces, but an industry.

Solution Preview

Porter's five forces model can be seen as static, but yet competition is dynamic and therefore industry structure changes. However, using Porter's 5 Forces Analysis is still helpful, and includes the following:

? Rivalry of competition
? Threat of substitutes
? Buyer power
? Supplier power
? Barriers to entry

Let's apply this to the airline industry.

Airline Industry: Porter's 5 Forces Analysis

1. Barriers to entry. Initially, one could think that the airline industry is fairly difficult to break into, but that is not necessarily so. For example, the new entrant would need to look at whether there are substantial costs to access bank loans and credit. For example, if borrowing money is cheap, then the likelihood of more airliners entering the industry is higher. The more new airlines that enter the market, the more saturated it ...

Solution Summary

An industry analysis using Porter's five forces are examined.