In five pages the competitive environment is considered by using this model in which the argument is made that despite its limitations and room for improvement the model is accurate. There are five bibliographic sources listed.
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seen as one of the most accurate. This is one of the models designed by Michael Porter and published in 1980 (Porter, 1980). His five forces model considers the
external macro effects on an organisation in a business environment (Goett, 1999). His five forces model is designed to show how the external environment can effect the way a business
operates, and that any strategy a business undertakes should take these factors into consideration when analysing their position and possible future (DAveni, 1999).
In understanding these external forces we will be better placed to deal with them, understanding their combined impact, when they come to play. The five forces Porter identifies are
the existing competitors, the threat of new entrants, substitute products (or services), and the power of purchasers and suppliers (Porter, 1980). Porter does not see these external factors as
working alone, they act in relationship to each other, and can also be influenced by the organisation which the effect, in understanding them the organisation is in the best position
to influence them (Thompson, 1998). This model may be twenty years old, but in seeking to understand its strengths and weaknesses we can look at each of these forces individually,
and the traditional view that accompanies them regarding the different positions. The first force we will consider it the threat of a
new entrant into the market. If a new competitor enters the market it can be interpreted as a threat which is attempting to take away some of the market share
of the existing companies in that sector. The first thing to consider in this instance is how easy is it for a competitor to enter the arena by analysing the