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Porter's 5 Forces Model and Industry

Using Porter's 5 Forces Model analyze the industry in which your specific business unit resides.

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I can explain this in terms of an advertising firm, as I work in an advertising agency. The industry is that of marketing / advertising, and these forces apply to the general advertising industry.

Let's first look at the Porter's 5 Forces Model. Essentially, this model explains that there are 5 forces that influence a firm, and this model can help a manager better understand their industry and gain a competitive advantage over their competition. There are the 5 forces:

Supplier power
Barrier to entry
Threat of substitutes
Buyer power
Degree of rivalry

Let's look at them in terms of advertising:

Barrier to entry

This is essentially how hard it is for a person to set up a business. Some industries have very high barriers to entry. An airline would be one for example. It firstly costs a great deal to set up an airline, you need a lot of capital to buy planes, you need to follow strict government regulations, and you need to hire top talent. Therefore, there is not a lot of competition in this industry, and profit margins are high.

In the world of advertising, barrier to entry would be ...

Solution Summary

This solution discusses an industry with reference to Porter's 5 Forces Model.