International Business

Environment & Strategy

BC430002S

Competition analysis –
Porter 5 forces plus

Robert Jones © 2010

robert.jones@anglia.ac.uk
 Five forces of competition

Remember – use
Porter’s terminology

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
 Five forces of competition

Remember – use
Porter’s terminology

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
 Five forces of competition

Remember – use High, medium or low?

Porter’s terminology
Barriers to entry

Switching costs Switching costs

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
 Five forces of competition

Remember – use
Porter’s terminology
Barriers to entry

Start here

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
First force - competitive rivalry
Make your 5-forces analysis quantitative
Identify the key competitors and their market shares:-

Source: TNS Worldpanel

http://www.tnsglobal.com
Source: TNS Worldpanel
http://www.tnsglobal.com
 Five forces of competition
Identify the key players
The central force
is most important –
use lots of data

Who is winning?
Who is standing still?
Market conditions Who is losing?

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
 Five forces of competition
possibilities of collaboration

Vertical integration Vertical integration

- backwards - forwards

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
 Five forces of competition – the threat axis

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
 Five forces of competition – new entrants
How to enter?
1.)
2.)
3.)
Barriers to entry 4.)

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
Is this the full picture?
 Other forces of competition?

Othe
r force
/s?

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
3 new forces adapted from Downes, L. & Mui, C. Unleashing The Killer App – Unleashing Strategies for Market Dominance,
Harvard Business School Press, 1998 See page 65 “The New Forces”!
 WTO
laws Political EU
rules Government
regulations Legal
taxes

interest rates Economic

exchange rates

Social

demographics

Technology
web-based,
digital
The market exists inside
The macro environment – © Robert Jones 2009
Porter 5 fits inside PESTEL Based on Porter 1980
 Five-plus forces of competition

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
3 new forces adapted from Downes, L. & Mui, C. Unleashing The Killer App – Unleashing Strategies for Market Dominance,
Harvard Business School Press, 1998 See page 65 “The New Forces”!
 Five-plus forces of competition Privatisation
Liberalisation

14 Cs
but…re-regulation?
New regulations?

Othe
Spe r force
cific /s
to se ?
ctor

Source: Johnson G. & Scholes K., Exploring Corporate Strategy, Pearson Education, 2002. Adapted from M.E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright
1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.!
3 new forces adapted from Downes, L. & Mui, C. Unleashing The Killer App – Unleashing Strategies for Market Dominance,
Harvard Business School Press, 1998 See page 65 “The New Forces”!