Strategic Case Analysis
14
retailers can have significant bargaining power if they
are the dominant players in their channel segment,
e.g., Walmart. Internet is also emerging as a dominant
distribution channel with the advent of e-commerce,
and examples of successful companies include
Amazon.com and Dell. Can sales and revenue grow, if
the company crafts and executes an effective Internet
strategy? Also see double marginalization in the
“Advanced Frameworks” chapter.
Framework #7 --- Porter's Five Forces
The five forces which one must consider to analyze any
industry are the
rivalry between the firms within the
industry being analyzed, the bargaining power of buyers,
the bargaining power of suppliers, the threat of substitute
products or services, and the threat of new entrants (also
known as barriers to entry).
They are depicted in the
diagram on the next page. Initially propounded by Harvard
Business School Professor Michael Porter, the Five Forces
framework has been accepted as a strategic framework that
one can apply to analyze any industry. Here, three
industries have been chosen to illustrate applications of this
framework: the IT (information technology) industry; the
auto industry; and the Internet which has emerged as a
threat to traditional media like print, radio, and TV. To
deepen the analysis, a three by three buyer-supplier matrix
has also been provided which depicts the interplays
between buyers and suppliers, two of the Porter five forces.
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