Porter1

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Grantham University

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ET 310

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Porter’s Five Force

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Porter’s Five Force

Porter’s Five Forces analysis can be defined as a framework that aids in analyzing

competition levels within a specific sector. The five forces were developed in 1979 by Michael

Porter to influence and shape profit potential. Businesses have a mandate to use analytic tools to

identify threats and address those challenges. Furthermore, Porter’s five forces look at the

company’s direct competitor and the structure and economic environment in that industry. In

addition to this framework, competitiveness comes from business competitors and the state of

competition in an industry that depends on the five forces. The leading five forces introduced by

Porter are the bargaining power of suppliers, the competitor in the industry, power of customers,

potential of new entrants into the industry, and threat of substitute products (Bruin, 2016).

Bargaining power of suppliers is a type of force that analyzes how much control and

power an organization’s suppliers or market inputs (Bruin, 2016). In this type of force, a

company has the ability to raise its prices or reduce the quality of the products and services, thus

resulting to decrease in industry profitability potential. Also, the concentration and availability of

suppliers are essential factors in determining supplier power. For instance, the bargaining power

of suppliers of an aircraft sector can be termed very high, especially when viewing at the

significant input the company requires. Furthermore, the external environment affects the inputs

over which the airspace companies have limited control over them. The price of fuel aviation is

an external environmental factor and a subject of fluctuation in the global oil market; thus can

frequently change due to various factors such as geopolitical. Aircraft manufacturing is another

instance with two significant suppliers: Boeing and Airbus therefore, they have limited

bargaining power over the price change.

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1 Porter’s Five Force Student’s Name Institution’s Name Course’s Name Professor’s Name Date 2 Porter’s Five Force Porter’s Five Forces analysis can be defined as a framework that aids in analyzing competition levels within a specific sector. The five forces were developed in 1979 by Michael Porter to influence and shape profit potential. Businesses have a mandate to use analytic tools to identify threats and address those challenges. Furthermore, Porter’s five forces look at the company’s direct competitor and the structure and economic environment in that industry. In addition to this framework, competitiveness comes from business competitors and the state of competition in an industry that depends on the five forces. The leading five forces introduced by Porter are the bargaining power of suppliers, the competitor in the industry, power of customers, potential of ...
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