Michael E. Porter developed the Five Forces Model in 1979 as a professor while working at Harvard Business School. The Five Forces Model helps companies asses the nature of an industry's competitiveness and to develop strategies to help raise the bar. The forces of the model consists of threat of substitutes, the threat of new entrants, competitive rivalry, the bargaining power of buyers, and the bargaining power of suppliers. Below, i will explain the five forces of this model.
1. Threat of Substitutes - The more substitutes that exist for a product, the more competition for companies and industries, it can also lower the potential profit of a underlying company.
2. Threat of New Entrants- Industries that seem profitable will be threatened by new competition since the benefits seem to be long term. However, barriers of entry exist and may stop companies from being created which will lower the competitiveness and reduce threats.
3. Competitive Rivalry - If companies compete with each other or particularly in an industry, there will be more actions taken that is driven by profits, price, and strategy.
4. Bargaining Power of Buyers - Buyers have the power within industries since they can easily switch over to another supplier, the reason they can do this is because if a customer is not satisfied with the company's goods or services, they may choose to take their business elsewhere.
5. Bargaining Power of Suppliers - Suppliers have power within industries since they dictate the terms with their customers. They decide what prices to set, and strategically decide the availability of their goods based on supply and demand.
The Five Forces Model is used to evaluate a company's position in a particular industry and to assess the level of competitiveness in the industry. If a company does business within different industries, then a model must be created for each of the industries. When conducting a analysis on an industry, you can perform three steps that are gathering information on each of the forces, analyzing results and displaying them in diagrams, and formulating a strategy based on findings.
After I saw Rodolphe Khoury's "Designing for the Internet of Things" video, it opened my eyes on how the sky is the limit with technology. Literally everything in our daily lives can be incorporated with cloud technology. Such as blankets, umbrellas or fridges. It's amazing and the creative ideas presented really make you wonder what the "next big thing" can be. Moreover, everything can be remotely accessed online to tailor to your needs. Furthermore, Cloud computing allows for companies to have a competitive advantage from other companies by accompanying special technology.
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