Understanding Porter's Five Forces Model for Competitive Strategy

The video discusses Porter's Five Forces model, developed by Michael Porter in the 1980s, which outlines competitive pressures businesses face in a market. It explains the five forces: threat of new entry, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and industry rivalry. The model helps businesses assess their competitive position but is criticized for being static in a dynamic world. It doesn't account for factors like CSR, international expansion, or niche markets, making it more theoretical than practical.

Who developed the competitive strategy model known as Porter's Five Forces?

• Peter Drucker

• Clayton Christensen

• Michael Porter

• Henry Mintzberg

Which of the following is NOT one of the five forces in Porter's model?

• Rivalry among existing competitors

• Bargaining power of suppliers

• Technological innovation

• Threat of new entrants

How does the threat of new entrants affect incumbent firms in a market?

• It reduces the need for innovation

• It increases the market share of incumbents

• It forces incumbents to innovate more rapidly

• It stabilizes the market conditions

What does Porter's Five Forces model help businesses determine?

• The net position of a business in the market

• The exact profit margins of a business

• The internal strengths of a business

• The best marketing strategy for a business

According to the model, what happens when an industry is deemed attractive?

• The market becomes less profitable

• New entrants are discouraged

• Incumbent firms face less competition

• New entrants are attracted to the market

What is a major criticism of Porter's Five Forces model?

• It is too dynamic for practical use

• It does not account for technological changes

• It is too specific to certain industries

• It is a static model in a dynamic world

Which factor is NOT considered in Porter's Five Forces model?

• Corporate social responsibility

• Bargaining power of buyers

• Threat of substitute products

• Rivalry among existing competitors