Marketing - Explain and Evaluate Porter's 'five forces' model Essay

Marketing - Explain and Evaluate Porter's 'five forces' model - Essay Example This model has become widely known, discussed and applied to various markets or industries. Porter’s Five Forces Model attempts to explain the forces which operate in the market with a potential to reduce the profitability of a firm as a result of the interests of various actors which are a part of the market, or who interact with the industry. Although consideration of Porter’s Five Forces model is essential for any analysis related to an industry or a market, the model also presents some limitations when it is used for the analysis of dynamic, global markets in which fast innovation, technology change and a rapid change of players has come to be accepted. This essay presents an explanation of Michael Porter’s Five Forces Model and examines some of the model’s limitations. Existing industries and those players who are about to enter a market, as well as the investors who want to make an investment in an industry need to understand the competitor dynamics associated with the industry or market. Such an understanding is necessary for the assessment of the potential investment opportunities associated with a venture so as to provide a better assessment of the returns which can be expected, sound business or strategic planning and how the products or services which are being offered by an industry player may be differentiated or enhanced from what is being offered by the competitors. Various models have been offered to assist with such an analysis including the Strengths, Weakness, Opportunities and Threats or SWOT model, Igor Ansoff’s Gap Analysis model, the resource based model and Michael Porter’s Five Forces Model (Porter, 1998) and (Quick MBA, 2005). Michael Porter’s Five Forces Model is one of the most popular and respected model which attempts to provide a greater understanding of the business environment of the industry and its relative attractiveness. The