Michael Porter is an eminent competition theorist and practitioner. Awards and achievements. Modified Porter's model for countries and regions, "national diamond"

Analysis competitive forces very important at all stages of a business. In this article, I want to introduce readers to another method for analyzing competitors and the competitive environment. This method is named after its author, Michael Porter, a professor at Harvard Business School. Michael Porter is one of the world's leading experts in economic competition both on internal and on international markets.

Introduction. Analysis of competitive forces according to Porter.

Porter presented his analysis of competitive forces in 1979, and at the same time this method was called "Porter's five forces method." During its professional activity Michael Porter has systematized the models of competition and developed the rules and methods for competing in the market.

Of course, first of all, Porter's five forces method is an analysis tool for big business... But he can and should use Porter's methods for his analyzes and further actions.

“For a company to generate stable, growing income, it needs to achieve leadership in one of three areas: in product, in price, or in a narrow market niche,” Porter wrote. And it's hard to disagree with this. And small business is also inseparable from these findings.

Michael Porter's Model of Five Competitive Forces.

In his theory of competition, Michael Porter described ways to create competitive advantage and long-term profitability in a product, as well as an analysis of competitive forces and ways in which it can maintain profitability and retain over a long period of time.

The essence of Porter's theory is shown in the figure. Porter's theory of competition asserts that there are five forces in the market that determine the comfort of a business in the market and its possible level.

Each force in Michael Porter's model poses a certain threat to business, has a significant impact on the level of competitiveness of both the business as a whole and individual products.

Michael Porter believes that it is the influence of suppliers, consumers, new entrants, the emergence of substitute products and competitors that are the main sources of competition. This was the name of the model - " model of five forces of competition according to Porter.

Porter's model allows for several fundamental conclusions.

1) As the activity in a market niche increases, that market niche becomes less profitable.

2) Accordingly, the weaker the influence of competitive forces, the more profitable and attractive the market niche.

3) Business profits are most influenced by the most influential competitive forces.

Consider the impact each force has on the market and business.

Strength # 1. The threat of the invasion of new players.

What dangers do new players bring to the market? First of all, new players create tightness in the market, trying to take customers away from existing players. In addition, new players add new production capacity to the market, new resources, possibly higher levels, perhaps more low prices for products. All this can cause changes in the market, change consumer preferences, and reduce the profits of existing players. The number of new players and their influence on the market niche depends on the level of entry barriers of this niche.

Porter identified six main factors affecting the height of the barriers to a niche market and making it difficult for new players to enter it.

1) Investment level for starting a business ... The higher First level to enter the market, the more difficult it is for new players to enter it, the less attractive it is for new players.

2) A variety of products on the market. The higher the variety of goods and services in the market niche, the more difficult it is for new players to enter the market.

3) The strength of existing brands in the market ... The more popular and well-known the brands of existing market players, the more difficult it is for a newcomer to enter it.

4) Production volume of existing players. The larger the volume of production of a business, the lower the cost per unit of output, the more difficult it is for a new player to achieve high and profitable when entering the market.

5) State regulation. The higher the restrictions imposed by the state on business, the greater the influence of the state on business, the lower the attractiveness of the niche for new players.

6) High fixed costs in the market niche ... The higher the level fixed costs in a market niche, in a region, the more difficult it is for new players to make a profit, the more difficult it is for them to enter the market.

7) Access to consumption channels. The harder it is to highlight target audience in the market, the more difficult it is to reach the target consumer, the lower the attractiveness of the market niche.

There are still quite a few threats to entry into the market niche for new players. This is both the willingness and ability of existing players to manipulate prices to maintain market share. This is the availability of reserve funding sources and additional production capacities for existing players. This is also the commitment of consumers to a particular brand. Well, one cannot discount the general slowdown in market growth, or recessions and crises in the market.

Strength # 2. Bargaining power of buyers.

The buyer ensures the existence of the market by satisfying his needs. The market does not exist without buyers. Therefore, the buyer is the most important participant in the market. And, therefore, it has a significant impact on the market.

What dangers do consumers bring to the market? Consumers can intensify competition by imposing higher requirements for product quality, service level, and constant pressure on the price level. Here are the main factors when buyers become a threat to a business and significantly affect its bottom line.

1) Dissatisfaction with product quality. Dissatisfaction with quality creates a need for quality products that can be satisfied by competitors or new market players.

2) Concentration of business sales to a limited circle of consumers. If buyers are concentrated in limited quantity of certain groups and these groups make purchases on a large scale, the business is forced to constantly make concessions to such buyers in order to generate income. But his profit will decline with these concessions.

3) Business products are not unique ... The products sold on the market are not unique and are no different from competitors' products. The buyer can freely change the seller without making a specific choice. The buyer's choice will be random.

4) Increased sensitivity of target consumers to product prices ... The higher the target consumers' sensitivity to, the higher the likelihood of buying a product at a lower price from competitors, despite the lower quality of their products. The consumer provokes a price war that does not end well.

As you can see, higher requirements imposed by the consumer force manufacturers to improve the quality and reduce the prices of their products. And this inevitably leads to an increase in costs and, consequently, a reduction in profits.

Strength # 3. The emergence of substitute products.

For the consumer, substitute products limit the rise in prices in the market. Well, for businesses, this is a very big threat. And if market players are unable to differentiate their product from substitute products, there will be low profits in the market niche and even many players leaving the market. A very typical example is the massive exit of inexpensive products from China to the markets.

What types of substitute products pose the greatest threat to the market?

1) Substitute products capable of providing the best price-quality ratio (look). Products with the best price-quality ratio almost always intercept a large group of consumers in the market.

2) Substitute goods that are not of high quality, but have clear advantage in price ... Simply put, counterfeits of the products of the main market players.

3) Brand new substitute products. Substitute goods that allow the consumer to satisfy the same needs as existing goods on the market, but by other, cheaper or better quality methods.

4) Substitute products manufactured by major players in other markets. Substitute goods produced by major players with high profits in other markets and able to have a less profitable business in the existing market.

It is quite natural that the higher the share of substitute products in the market, the lower the profit and competitiveness of businesses operating in the market.

Strength # 4. Bargaining power of suppliers.

Suppliers influence the competitiveness of market players because are the owners of the resources for the production of products. Here are the main factors when suppliers become a threat to a business and significantly affect its bottom line.

1) Few suppliers on the market ... The fewer suppliers there are, the more likely an unjustified increase in prices for supplied raw materials is. The most unfavorable factor is the monopoly of raw material suppliers and its dictate of prices and conditions.

2) Limited amount of products manufactured by suppliers. Or a limited amount of quality products they produce. This volume does not meet the market demand for high-quality raw materials and allows suppliers to dictate their terms.

3) Low interest of producers of raw materials in the market segment. The market niche is not a priority for suppliers and the sale of their resources in it does not ensure high income for the supplier.

4) High costs when switching to new suppliers. The costs of switching to new suppliers are high due to the uniqueness of raw materials or due to the considerable distance of new suppliers.

The bargaining power of suppliers results in higher raw material prices. And if market players cannot raise their prices by finished products, profit from the sale of goods and services decreases.

Strength # 5. Market competition.

Market competition is good for the consumer. And businesses lead to a decrease in product prices, an increase in the cost of promoting a product, an increase in product quality, and an increase in investment in new developments. All this reduces the profitability of businesses.

Competition grows and becomes a threat to businesses when a number of factors are present.

1) Market tightness or market niche. There is a large number of players on the market and their number is constantly growing. Moreover, there are no clear market leaders. The more players on the market, the higher the level of competition and the risk of losing market share.

2) Low rate of market growth or decline in the market. It leads to a constant redistribution of the market, the capture of market share from each other.

3) Large number of homogeneous products on the market ... Low product differentiation in the market creates a multitude of purchase options for the consumer, leads to constant switching of the consumer from one business to another, leads to the instability of income and profits of businesses.

4) High costs of business reorientation ... If the costs of reorienting businesses in a given market segment are high, players do not leave this segment, continue to exist even with low profitability, create a surplus of products on the market, and increase competition.

Conclusion.

The article turned out to be quite long. But even in it, I did not convey all the information on the analysis of Porter's competitive forces. The analysis of Porter's competitive forces is good precisely for its practical component. But I think that acquaintance with his theory is very useful, and without this acquaintance it is impossible to go to practical application analysis of the five competitive forces. Therefore, I will talk about how to practically use his analysis of competitive forces in the next article. So, who is interested in this topic, follow the news on the site.

And I also want to say about my observations. It seems that all of Porter's conclusions are very simple, logical and well-known. But this only underlines the relevance of his theory - a very simple and logical analysis of competitive forces.

Countries.

Michael Porter
Michael porter
Date of Birth May, 23rd(1947-05-23 ) (Age 71)
Place of Birth Michigan
Country
Scientific sphere economy
Place of work
  • Harvard University
Alma mater
  • Princeton University
  • Harvard Business School
  • Harvard University
supervisor Richard Earl Robinson[d] and Richard E. Caves[d]
Known as specialist in the study of economic competition
Awards and prizes
Michael Porter at Wikimedia Commons

Biography

Professor Porter has pioneered the revitalization of America's old inner cities. M. Porter is the founder and chairman of the non-profit organization Competitive Hinterland Initiative (eng. Initiative for a Competitive Inner City) (USA), which is looking for ways to accelerate the development and growth of the old central part of the city, based on business, and offers a new approach to its economic development.

Scientific views

Porter, as a popularizer of the concept of an economic cluster, showed that the competitiveness of a company is largely determined by the competitiveness of its economic environment, which, in turn, depends on the basic conditions (common resource) and competition within the cluster.

Porter proposed the first known typology of competitive strategies (basic competitive strategies).

Porter developed a well-known competitiveness analysis methodology to determine the company's strategy based on the study of the actions of competitors and the market as a whole, and also described the stages of growth in the competitiveness of the national economy (from the stage of "primary factors" such as cheap labor, to the stage of competition based on innovation and the last stages - competition based on wealth).

According to Michael Porter, the stronger the competition in the domestic market of a country and the higher the demands of buyers, the more likely the companies from this country to succeed in international markets (and vice versa, the weakening of competition in the national market usually leads to the loss of competitive advantages).

Michael Porter defines sustainable competitive advantage as a combination of activities that are difficult to copy.

He developed a model of 5 market forces, which include existing competitors, new competitors over a period of time, competitors who trade in substitute goods or offer substitute services, suppliers and consumers.

Porter's fundamental book The Competitive Advantage of Nations was published in Russian under the title International Competition.

Bibliography

Monographs

  • Interbrand Choice, Strategy, and Bilateral Market Power (Harvard Economic Studies). - Cambridge, Mass .: Harvard University Press, 1976 .-- 254 p. - ISBN 0-674-45820-6.
  • Competitive Strategy: Techniques for Analyzing Industries and Competitors. - New York: The Free Press, 1980 (2nd ed. - New York: Free Press, 1998. - 397 p. - ISBN 978-0-684-84148-9);
Russian per.: Competitive strategy: Methods for analyzing industries and competitors / per. from English I. Minervina; - M.: "

Since the time of Adam Smith, the theory of market relations has evolved significantly. Both the theoretical base and applied industries are developing. In the field of competition studies, Michael Porter's five forces analysis is currently popular. With its help it is possible to make detailed analysis environment and develop a countermeasure strategy. It should be noted that this is not a panacea, and not even the only theory in the field of studying competitiveness.

The history of the emergence of the model of five competitive forces M. Porter

Comprehension of any theory is inalienable from understanding the way of thinking of its author. Michael Eugene Porter was born in 1947 in Michigan, United States of America. Eternal excellent student. Winner of many awards. Has seven honorary doctorates. He is currently a professor in the department at Harvard Business School in Boston.

This is a thin gray-haired man in all photographs, invariably wearing a tie. He travels a lot around the world with lectures and seminars. An excellent speaker. He skillfully manages the attention of the audience and feels well the mood of the audience. During the lecture, he can relax, take off his tie. He speaks with enthusiasm. His theory of the five forces of competition has been around for about forty years and M. Porter continues to work on its improvement and adaptation to modern conditions of a market economy.

Dr. Porter's theory was used in their work such large companies like DuPont, Royal Dutch Shell, Procter & Gamble, Nevskaya Cosmetics and many others.

A summary of Michael Porter's five-factor model

The essence of Porter's theory is in the differentiation of competitive forces and the analysis of individual indicators. The theory is successful, judging by the fact that M. Porter collaborated with many, and at the same time the company has always achieved success in the competition.

M. Porter sees the company's weakness in the fact that managers look at the problem of competition narrowly, seeing evil for themselves only in firms that occupy the same cell in the economy with them. Whereas competition is the sum total of the underlying forces that affect the economic viability of a company. Among the competitive forces in Porter's model are:

  1. Intensity of competition in the industry.
  2. The emergence of substitutes.
  3. Problems with suppliers.
  4. Consumer problems.
  5. The threat of the emergence of new competitors.

During the lectures, Porter draws a diagram with just chalk on a blackboard. V teaching aids This is often the portrayal of the theory of the five forces of competition.

Each influencing factor can be considered separately.

Intensity of competition in the industry

The model involves analyzing the industry and what factors are behind competition problems. M. Porter talks about the "threshold of entry." As an example, he cites air transportation. Starting a business in this area, from his point of view, is quite easy: You just need to have one plane. The first regular flight can be launched. However, there are many airlines that provide the same services. The passenger can choose, and if the ticket is cheaper, take another flight in an hour. Or it will use another mode of transport, etc. With such a threshold for entering a business and regulated competition, the profitability is quite low. The intensity of competition is also determined by:

  1. A large number of similar companies performing the same type of activity or providing the same types of services.
  2. Typical similarity of manufactured goods.
  3. The level of costs for the production of goods and services (consistently high cost).
  4. High entry barrier (market maturity and saturation).

Profitability also depends on the internal structure of the industry. And susceptibility to "stormy effects of external forces."

The emergence of substitutes

There is always the possibility of new types of goods for the same purpose appearing on the market. The task of management is to anticipate the possibility of commodity substitution and to respond in a timely manner to such facts. A new product on the market may be cheaper in terms of cost or meet other, increased requirements. The threat of the appearance of a new product can be prevented if the pricing and marketing policy of the company is properly organized:

  1. Price competition can turn the consumer's attention to low prices instead of focusing on quality.
  2. Advertising attacks draw attention to the product and distract from the possibility of its substitution.
  3. The production of new attractive products within the company reduces the possibility of commodity substitution.
  4. Improving the quality of service in the sale and distribution of the product will reduce the competitiveness of the substitute.

Problems with suppliers

Suppliers have the same competitive environment, defined by the same criteria. Their strength is determined by:

  1. The presence of large supplier companies. Possibility of monopoly.
  2. The uniqueness of the supplied goods.
  3. An option when the industry where the goods are supplied is not the main one for the supplier.
  4. Consistency. The lack of supplies will lead to the liquidation of the company itself.
  5. Ability to join a buying firm through vertical integration.

Suppliers can:

  1. Increase the price of your goods.
  2. Reduce the number of products and services provided.

Consumer factor

Buyers influence competitiveness no less than other factors... Their strength depends on such factors:

  1. Cohesion of consumers. Often - their organization around a society.
  2. The importance of the product to the consumer.
  3. The breadth of areas of product use.
  4. Awareness level about substitutes and product applications.

A strong consumer can:

  1. Put pressure on prices to bring them down.
  2. Demand high quality.
  3. Demand better service.
  4. Bumping manufacturers against each other.

The threat of the emergence of new competitors

The risk of new players appearing in an existing niche is determined by economic attractiveness and the threshold for entering the business. Such factors influence:

  1. Price attractiveness of entering the market.
  2. Low cost of organizing production (services).
  3. Ease of entering the business (entry threshold).

How the model is used: analyzing the situation and building a strategy

M. Porter explains that the principle of his method of five forces of competition lies in a systematic and integrated approach to building a strategy for relationships with all market participants.

For successful and competitive work it is necessary:

  1. Analysis of the industry, identification of the factors behind the competition.
  2. Determination of the structure of the industry. Its attractiveness and threshold of entry.
  3. Understanding the dynamics of the industry. How quickly changes occur, the direction of movement.

The circle of stakeholders is expanding as much as possible. The main strategic challenge in all industries is to find a unique need that the company will satisfy with its activities. For this, the procedure is determined:

  1. Determining the company's priorities, for example, making a profit, achieving a monopoly, expanding, etc.
  2. Highlighting the circle of the most powerful factors from the five forces.
  3. Concretization of the problem facing the company in terms of specific strength.
  4. Selection of factors that can be mitigated.
  5. Drawing up an action plan to bring the plan to life.

An example of mathematical factor analysis

Forces can be assessed mathematically, for example, in the form of a table. Here is an example of a calculation for the construction industry, specifically for installers (assemblers) plastic windows.

Evaluation criteria are made on a ten-point system. The final rating is calculated using the formula:

The calculation can be carried out independently for several sources, by different authors and for several industries, after which the priority area is determined.

Table: Assessment of Competitive Forces in the Construction Industry

According to the table, we see that the industry is attractive. Quite high competition - 8 and the possibility of new competitors - 6. Consumer power is low "1" due to high demand for plastic windows. The possibility of the appearance of commodity substitutes is below average. In the market of suppliers, and these are manufacturers of plastic windows, a monopoly, suppliers have a strong influence. They can dictate their own terms. From these data, conclusions follow, and we can recommend:

  1. Our influence on existing competitors is small. We can fight with quality, but at the moment it is not cost-effective. Rating "8". Let's analyze the possibility of price reduction.
  2. The possibility of the emergence of substitutes is small. There is a market for plastic and wooden windows. The consumers are identified. Recommended advertising campaign on the advantage of our plastic, monitoring of prices and services of related companies.
  3. Supplier power is high due to the monopoly. This is a very strong influence on the market. Threat mitigation is required. Suppose there are funds. The share in existing production to influence supplies or organize a new production of finished goods.
  4. The consumer is not organized. Demand exceeds supply. The influence of this factor on this stage can be neglected.
  5. The possibility of new competitors emerging is high. To take measures to reduce the attractiveness of the market for new enterprises - to adjust the quality and price policy.

Video: a detailed description of the choice of a competitive strategy for Porter

Modified Porter's model for countries and regions, "national diamond"

Dr. Michael Porter works not only in the field of mesomedia (M. Porter's terminology) - relations at the company level. He developed a similar approach for the macroeconomics of countries and individual peoples.... To analyze the situation and the prospects for the development of states, he suggested using the "competitive diamond".

The analysis of the economy of states is based on the concepts of the initial state of the economy, conditions of demand, the state of individual industries and the strategy of the state. The key question is efficient use natural and national peculiarities with the attraction of foreign technologies and investments.

In Russia, Dr. Porter became widely known after 2005, when, at the invitation of the government, he was engaged in research on the country's competitiveness. Dr. Michael Porter's report was published in 2006, but it is known in full only to specialists. From Porter's point of view, the main drawback is the raw materials orientation of the Russian economy. And focus on large vertically integrated companies. This thesis was then repeatedly played up in the media. different countries... Porter criticizes the idea of ​​national leaders, from his point of view, she died with General Motors. The backbone of the economy is mobile companies.

Key aspects of Michael Porter's theory of five competitive forces

From the last lectures of Michael Porter, we can conclude that from his point of view, the main thing is:

  • An integrated approach to addressing the importance and impact of the various forces of competition.
  • Orientation of the entire management team to ultimate goal and ways to achieve it.
  • The openness of the company. The strategy doesn't have to be secret. Personal experience Dr. M. Porter shows that it does not matter at all whether competitors are aware of the adopted strategy. But openness in this issue contributes to the overall adjustment of management actions in a given direction.
  • An intuitive approach. Porter himself believes that actions to counter the forces of competition should be intuitive and largely spontaneous.
  • Changes over time. Impact factors are variable in nature and subject to temporary adjustment.

At all levels of competition, M. Porter uses the concepts of positive and negative competition. An example of a positive are those actions of the company, as a result of which the quality of goods or services improves.

In order to make a company a leader in any area, the approach is general. This is a differentiated difference between the company and other enterprises, the concentration of management on the main goal and the use of successful strategy in the field of competitiveness.

Including competition in international markets, competition between countries and regions. Developed a theory of countries' competitive advantages.

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Subtitles

Biography

Professor Porter has pioneered the revitalization of America's old inner cities. M. Porter is the founder and chairman of the non-profit organization Competitive Hinterland Initiative (eng. Initiative for a Competitive Inner City) (USA), which is looking for ways to accelerate the development and growth of the old central part of the city, based on business, and offers a new approach to its economic development.

Scientific views

Porter, as a popularizer of the concept of an economic cluster, showed that the competitiveness of a company is largely determined by the competitiveness of its economic environment, which, in turn, depends on the basic conditions (common resource) and competition within the cluster.

Porter developed a well-known methodology for analyzing competitiveness, and also described the stages of growth in the competitiveness of the national economy (from the stage of "primary factors", such as cheap labor, to the stage of competition based on innovation and the last stage - competition based on wealth).

According to Michael Porter, the stronger the competition in the domestic market of a country and the higher the demands of buyers, the more likely the companies from this country to succeed in international markets (and vice versa, the weakening of competition in the national market usually leads to the loss of competitive advantages).

Porter's fundamental book The Competitive Advantage of Nations was published in Russian under the title International Competition.

Bibliography

Monographs

  • Interbrand Choice, Strategy, and Bilateral Market Power (Harvard Economic Studies). - Cambridge, Mass .: Harvard University Press, 1976 .-- 254 p. - ISBN 0-674-45820-6.
  • Competitive Strategy: Techniques for Analyzing Industries and Competitors. - New York: The Free Press, 1980 (2nd ed. - New York: Free Press, 1998. - 397 p. - ISBN 978-0-684-84148-9);
Russian per.: Competitive strategy: Methods for analyzing industries and competitors / per. from English I. Minervina; - M.: "Alpina Publisher", 2011. - 454 p. - ISBN 978-5-9614-1605-3.
  • Competitive Advantage: Creating and Sustaining Superior Performance. - New York: The Free Press, 1985 (2nd ed. - New York: Free Press, 1998. - 592 p. - ISBN 978-0-684-84146-5);
Russian per.: Competitive advantage: How to achieve a high result and ensure its sustainability / per. from English E. Kalinina. - M .: "Alpina Publisher", 2008 (2nd edition - 2008). - 720 p. - ISBN 978-5-9614-0760-0.
  • Competitive Advantage of Nations. - New York: Free Press, 1990 (2nd ed. - New York: Free Press, 1998. - 896 p. - Japanese economic model. Can Japan compete? - M .: "Alpina Publisher", 2005. - 262 p. . - ISBN 5-9614-0130-8.
    • Porter M. E., Elizabeth Olmsted Teisberg E. O. Redefining Health Care: Creating Value-Based Competition on Results. - Boston: Harvard business School Press, 2006 .-- 506 p. - ISBN 1-59139-778-2.

    Compilations

    • Porter, M. E.(ed.) Competition in Global Industries. Boston: Harvard Business School Press, 1986.

    Featured Articles

    • Porter M. E. How Competitive Forces Shape Strategy // Harvard Business Review, March / April 1979.
    • Porter M. E. From Competitive Advantage to Corporate Strategy // Harvard Business Review, May / June 1987, pp 43-59.
    • Porter M. E. Towards a Dynamic Theory of Strategy // Strategic Management Journal, 1991, 12 (Winter Special Issue), pp. 95-117.
    • Porter M. E. What is Strategy // Harvard Business Review, Nov / Dec 1996.
    • McGahan A. M., Porter M. E. How Much Does Industry Matter, Really? // Strategic Management Journal, 1997, 18 (Summer Special Issue), pp. 15-30.
    • Porter M. E. Strategy and the Internet // Harvard Business Review, March 2001, pp. 62-78.
    • Porter M. E., Kramer M. R. Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility // Harvard Business Review, December 2006, pp. 78-92.

Michael Porter is a renowned economist, researcher, writer, and teacher. Throughout her career at Harvard Business School, facing economics and society, including market competition and company strategy, economic development, health care and environmental protection.

His extensive research in the field of economic competition is widely recognized in governments, corporations, academia around the world. They have received numerous awards.

Professor Porter is the recipient of twenty-four honorary doctorates and several national and state awards. He received the world's first economic development award from the US Department of Commerce and was elected an honorary member of the Royal Society of Edinburgh and other high-profile societies.

In 2000, Porter was named professor at Harvard University - the highest title that can be awarded to a teacher of this educational institution.

Some biographical facts

In his younger years, he was fond of football and baseball, participated in competitions from his state. He traveled extensively around the world.

At Princeton, he played golf among college students. Graduated from Princeton University in 1969 with a thorough study of aerospace and mechanical engineering.

In 1973 he received his Ph.D. in business economics from Harvard University. Porter served in the US Army Conservation Reserve as a captain.

Over the years, he maintains an inexhaustible interest in aesthetics and business, music and art, working on strategy issues with art organizations and aspiring musicians.

Today Professor Porter and his two daughters live in Brooklyn, Massachusetts.

Porter's five forces

It is a business analysis model that helps explain why different industries are able to support different levels of profitability. The model was originally published in Michael Porter's book Competitive Strategy: Methods for Analyzing Industries and Competitors in 1980.

The model is widely used to analyze the industry structure of a company as well as its corporate strategy. Michael Porter has identified five undeniable forces that play a role in shaping every market and industry on a global scale. Forces are often used to measure the intensity of competition, the attractiveness and profitability of an industry or market.

These forces are:

  1. Industry competition.
  2. Potential for new entrants to the industry.
  3. The power of suppliers.
  4. Customer power.
  5. The threat of substitute products.

Understanding Porter's 5 Forces and applying them to the industry allows the company to adjust its business strategy to better use resources to generate higher returns.

Achievements and success

One of the most influential management gurus of this century, Michael Porter is recognized as the father of corporate strategy and management. Evidence of this is the fact that on the shelf of every successful businessman there are his books, which are a huge opus in the field competitive strategy and strategic action companies.

Porter's research found universal acceptance. His ideas are incorporated into the curriculum of every prestigious business school around the world. He is responsible for creating the foundation for modern business strategy courses and is a strategic advisor to many successful and leading American and international companies.

Over the years, Professor Porter has written over 18 books and 125 different articles on the benefits of business and competitive strategy in it. He was a guest columnist for the Wall Street Journal.

Some of his works:

  • "Strategy for the formation of competitive forces";
  • "Competitive strategy";
  • Redefining Health Care: Creating Competitive Value Based on Results;
  • "Strategy and the Internet".

When Porter began studying strategy, he believed that many strategic mistakes were caused by external factors such as consumer trends, or technological changes. He said: “After 25-30 years, I have come to realize that many, if not most, strategic mistakes come from within. The company does it on its own. "

Awards and achievements

In 2009 he received an honorary degree from McGill University.

He is the recipient of the José Dolores Estrada Order of Merit, one of the highest civilian awards awarded by the Nicaraguan government.

Received the McKinsey award six times.

Member of the Society for Strategic Management.

 

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