Porters 5 Forces
Porters 6 Forces
Key strategy thinker Michael Porter has developed a tool to examine the key tensions within the competitive landscape, the tool will help users critically examine the landscape and address strategic alignment questions.
Competitive Landscapes
Porter's Forces, five and later six, is a key tool for analysing the competitive landscape. It is often characterised as a key tool for examining “industry attractiveness”, as it allows you to map out the different variables that affect value creation in a sector. Porter’s Forces is useful when considering the Strategic Alignment Questions in Stage 3, particularly when critically examining the viability and the desirability of addressing the need. You will note that some of the factors identified by Porter also touch on the feasibility of competing in the space. Doing this in a group setting is useful, particularly facilitated by the EBNWorks team; follow the link to access more detailed guidance on how to use the tool; you should attach the outcome of the exercise as evidence.
What is the Porters Forces Tool
Porter suggests that rivalry between firms within the market is at the centre of the competitive landscape. These firms compete for inputs from their suppliers and outputs to their clients or customers. They also need to consider the threat of new entrants (as the incumbent or challenger) and the degree to which the offer might be substituted. Later, Porter suggested considering complementary goods and services as part of the competitive landscape. Typically, the forces model is set out as a diagram (see Figure 1)
Table 1: Detailed Considerations in Porter’s Five Forces
The later addition of complementary products and services includes
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The control over complimentary items
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The ability to bundle or sell together
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Cross subsidy and selling one to sell another.
How to Use it
A tool is simply a structure for framing useful questions and presenting the outcome of the inquiries you conduct as part of addressing those questions. Porter’s Forces is useful when considering the Strategic Alignment Questions in Stage 3, particularly when critically examining the viability and the desirability of addressing the need. You will note that some of the factors identified by Porter also touch on the feasibility of competing in the space. Doing this in a group setting is useful, particularly facilitated by the EBNWorks team, you should attach the outcome of the exercise as evidence.
It is important to examine each criterion carefully when examining the tensions between these different aspects. Porter suggested a series of prompts to help people get the most from the tool (see Table 1).
IDEO Model
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