Threat from Substitute Products Rivalry among the existing players. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition.
What part of the economy would you investigate to find a good bet? Would you go with the airline industry and gamble on the popularity of air travel?
Would you go with snack food? How would you choose the best industry in which to invest your money? Inhe wrote a book, Competitive Strategy, in which he came up with five economic forces to explain why certain industries persistently outperform others.
Those five forces are: These five forces have been successful for 30 years at evaluating why some industries consistently do better than others, says Joe Mahoney, professor of strategic management at the University of Illinois. Groupon is by far the leader in this new online discount industry, but it has many competitors, including LivingSocial, Google Offers and nearly others, according to CNBC.
Its closest rival, LivingSocial, is backed by giant online retailer Amazon. When it comes to Groupon, this is a bit of a mixed bag. Since it is easy to hop from one deal site to another, buyers can choose to switch fairly easily if they have a bad experience or find a better deal.
There are not many. It takes some computing power, a sales team and funding to get a daily deal site set up, and all three can be accomplished fairly cheaply.
Even smaller players can get started without having to buy much equipment or even rent office space. Businesses looking to push their deals through a Groupon-like site have some limitations, mostly because they may not be able to judge if the deal will benefit them or not. But again, since there are so many companies in this industry, the firm that wants to offer a deal can do a lot of shopping around to find the best fit.
The model only works at an industry level, so even if you decide to invest in a daily deal site, you will have to do more research to find the right company. And the model focuses entirely on competition and ignores another force, which some consider to be the sixth part of the Five Forces model: Answer one or more of these questions to start the conversation: What are its limitations?
Would you invest in Groupon or another online coupon site? Why or why not?Porter's Five Forces Analysis is an important tool for understanding the forces that shape competition within an industry.
It is also useful for helping you to adjust your strategy to suit your competitive environment, and to improve your potential profit.
WikiWealth’s comprehensive five (5) forces analysis of groupon includes bargaining power of supplies and customers; threat of substitutes, competitors, and rivals. Jan 01, · Coupon Groupon Porter Five Forces Social Buying Porter's Five Forces: Social Coupon/Deal Market; Groupon Hype; 10 Reasons why GroupOn will struggle Research Marketing Strategy Mashable Maths MBA Memories MMORPG Monetization Network Effects Offer OkCupid OLAP Oracle Osama Pagalguy Porter Five Forces Product Product.
Porter’s five forces model is one tool to understand how the money is being made.” Assume you were thinking of buying stock in an online deal or coupon site, like Groupon, which recently went public and started trading its shares on the stock market.
Porter’s Five Forces Example. Analyzing Porter’s five forces example does not always yield a simple or straightforward evaluation of the attractiveness and profitability of an industry.
Some of the forces may be strong, increasing competition and decreasing profit potential, while other forces may be weak, decreasing competition and increasing profit potential.