Porter’s Five Force model had been established primarily in order to analyze the structure of competitive environment of a particular industry. Friedrich Gr?ne and K?ster (2011) stated that by analyzing the bargaining power of the suppliers and power of customers, the model evaluates the demand of the industry in current market. If the industry has to face high supply power and low power of buyers, the current demand of the industry would be high automatically due to the high range of customer demand. Porter’s five forces successfully evaluate how the threat of substitutes and the competitor’s rivalry enhances the entire flow of business within a particular industry. The industry in order to enter into the new market has to face several new market entry threats initially. Merchant (2012) stated that porter’s five forces evaluation is outdated for making an effective industry analysis in current scenario due to several reasons. By evaluating this particular tool, the business experts can show a simple market structure based on which people would get an in-depth overview about the current needs and demands of this industry in the present market.
Grundy (2006) strongly opposed the point of view of previous scholar. As per the opinion of this eminent scholar PEST analysis is important for making effective environmental analysis. Like the similar way, by using the tools of Porter’s Five Forces, the businesspersons would get a deep insight about the suppliers and buyers’ power. After getting an in-depth overview, the industry would like to form business strategy and policy for drawing the attention of customers. Therefore, Porter’s five force is not outdated for making an effective industry analysis.
Friedrich, L. Gr?ne, M. and K?ster, A. 2011. Measuring industry digitization & Leaders and laggards in the digital economy. Retrieved 15 December 2016. From nd-Measuring-Industry-Digitization-LeadersLaggards-Digital-Economy.pdf
Grundy, T. 2006. Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15(5), 213-229.
Merchant, N. 2012, February). Why Porter’s Model No Longer Works. Harvard Business Review .