Porters five forces model Free Essay Example, 1250 words

Porters five forces model Introduction Michael Porter has formulated his famous five forces theory for determining the competitive power of an organization, while he was working as a professor in Harvard University in the 1970’s and 80’s. He has redefined all the traditional business theories and introduced new benchmarks such as potential entrants, supplier power, industry rivalry, buyer power and threats from substitute products for determining the strengths and weaknesses of an organization. Majority of modern organizations are currently using Porter’s five forces theory to determine their competitive power in the market. I am currently working in hospitality industry and my organization has intentions to diversify its activities to banking sector. Even though we have better expertise in managing our hospitality business, banking is entirely a new business segment for us. So, before entering banking industry, it is necessary for us to analyze our business prospects in banking industry based on Porter’s five forces model. My organization’s management asked me to prepare a report about our business prospects in banking industry. This report analyses the strengths and weaknesses of our organization in doing banking business based on Porter’s Five Forces model. We will write a custom essay sample on Porter's five forces model or any topic specifically for you Only $17.96 $11.86/pageorder now Banking industry and Porter’s Five Forces model According to Michael Porter, there are five competitive forces that may affect any organization doing business in any sector. These five forces are; Threat of substitute products, Threat of new entrants, Intense rivalry among existing players, Bargaining power of suppliers and Bargaining power of Buyers (Porter’s Five Forces Model, 2009). The figure given in the next page explains Porter’s five forces theory. (Porter’s Five Forces Model, 2009) Even though our organization has a good brand value in the market, it should be noted that our brand value is in hospitality industry alone. Banking is an industry in which huge competition is currently going on and prominent organizations from all over the world are currently competing in this business segment. Since globalization has succeeded in reducing the barriers for potential entrants from overseas countries, many of the Indian, American and Japanese banks are currently waiting for the opportunities to enter British banking industry. In other words, competition in British banking industry is going to be toughened because of the potential entrants from overseas countries. The threats from substitute products are also growing day by day against banking industry all over the world and British banking industry is also not an exception.