One way to analyze your competition and understand where you stand in colombia whatsapp number data 5 million your industry is by using Porter's Five Forces model.
This five forces model looks at five specific factors that determine whether a company can be profitable relative to other companies in the industry. Using Porter's five forces along with a SWOT analysis will help you understand where your company or business fits into the industry landscape.
It is considered a macro tool in business analysis: it analyzes the economics of the industry as a whole, while a SWOT analysis is a microanalytical tool, which focuses on the data and analysis of a specific company.
“Understanding competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition (and profitability) over time,” Porter wrote in a Harvard Business Review article . “A healthy industry structure should be as much a concern for strategists as their own company’s competitive position.”
Porter as a business strategy
Porter's Five Forces Example
There are several examples of how Porter's five forces can be applied to various industries. The ultimate goal is to identify the opportunities and threats that could affect a company.
As an example, the stock analysis firm Trefis analyzed how Under Armour fits into the sports footwear and apparel industry.
Competitive Rivalry: Under Armour faces intense competition from Nike, Adidas, and newer players. Nike and Adidas, which have considerably greater resources at their disposal, are making a play within the performance apparel market to gain market share in this promising product category. Under Armour does not hold any fabric or process patents, so its product portfolio could be copied in the future.
Supplier bargaining power: A diverse supplier base limits the bargaining power of suppliers. Under Armour products are produced by dozens of manufacturers based in multiple countries. This provides an advantage to Under Armour by decreasing supplier leverage.
Bargaining power of customers: Under Armour's customers include wholesale customers and end customers. Wholesale customers, such as Dick's Sporting Goods, have some degree of bargaining leverage as they could substitute Under Armour's products for those of Under Armour's competitors to obtain higher margins. The bargaining power of end customers is lower as Under Armour enjoys strong brand recognition.
Threat of new entrants: Huge capital costs are required for branding, advertising, and creating demand for products, which limits the entry of new players into the sportswear market. However, existing companies in the sportswear industry could enter the sportswear market in the future.
Threat of substitute products: Demand for sportswear, sports shoes and accessories is expected to continue to grow. Therefore, this force does not threaten Under Armour in the foreseeable future.
Trefis has completed similar analyses of Facebook , Nike , Coach and Ralph Lauren . Another example of applying Porter's 5 Forces to a well-known brand is the one recently conducted by Lawrence Gregory for McDonald's.
Strategies for success
Once your analysis is complete, it’s time to implement a strategy to expand your competitive advantage. To that end, Porter identified three generic strategies that can be implemented in any industry (and by companies of any size).
Cost leadership
Their goal is to increase profits by reducing costs while charging industry-standard prices, or to increase market share by reducing the selling price while preserving profits.
Differentiation
To implement this strategy, your company's products must be significantly better than those of the competition, improving your competitiveness and value to the public. It requires extensive research and development, as well as effective sales and marketing.
Attention
Successful implementation involves the company selecting niche markets in which to sell its products. It requires an intense understanding of the market, its sellers, buyers and competitors.
