1. The concept of the five forces model

The five forces analysis model was proposed by Michael Porter in the early 1980s and has had a profound impact on corporate strategy formulation globally. Used for competitive strategy analysis, it can effectively analyze the customer's competitive environment. The five forces are: the bargaining power of suppliers, the bargaining power of buyers, the ability of potential competitors to enter, the substitution ability of substitutes, and the current competitiveness of competitors in the industry.

II. Overview of the Five Forces Model

The Five Forces Model brings together a large number of different factors into a simple model to analyze the basic competitive situation of an industry. The five forces model identifies five major sources of competition, namely the bargaining power of suppliers and buyers, the threat of potential entrants, the threat of substitutes, and, finally, competition among firms in the same industry. The development of a viable strategy should first involve identifying and evaluating these five forces. The nature and importance of different forces vary by industry and company.

3. Defects of the Five Forces Model

In fact, there have been many debates about the practical application of the five forces analysis model. A more consistent view is that the model is more of a theoretical thinking tool than a practical strategic tool.

Fourth and Five Forces Model Establishing the Foundation

1. Strategists can understand the information of the entire industry, which is obviously difficult to achieve in reality;

2 , there is only competition, not cooperation, between the same industries. However, in reality, there are various cooperative relationships between enterprises, which are not necessarily life-and-death competitive relationships;

3. The scale of the industry is fixed, so the only way to occupy greater resources is to seize the opponent's share. and market. But in reality, companies often obtain greater resources and markets not by eating their opponents but by working together with their opponents to expand the industry's pie. At the same time, the market can increase capacity through continuous development and innovation;

4. Therefore, to effectively use Porter's competitiveness model in practical operations, the above three factors that do not exist in reality must If any assumption is made, the operator will be either at a loss or confused.