Michael Porter's change of view - Essay Example

He said that, most managers’ defined competition in a narrow way like it only occurred among direct competitors (Porter 2008). Nevertheless, competition for profits basically goes afar establishing industry rivals that include other competitive forces such as customers, suppliers, potential entrants and substitute products. Although, there are different companies undertaking different objectives, the core factors that shape the market with profitability are similar. The only way to understand industries is by analysing the industry through the use of underlying structures that are related to the five forces.

2 The role of business in the society Any business must have a role in society. In essence, businesses create prosperity where healthy businesses need a healthy community. Moreover, there has been an over growing alertness of major challenges that are in the society. In particular, there has been the lack of sufficient resources and capabilities form the government and non profitable organization to handle these challenges (Kotter 1996). However, more of the public sees business as prospering at the outlay of the society and even though there has been notable corporate citizenship activities the legitimacy of business has gone down amicably (Paton and McCalman 2008) ss Fig 2; The connection /disconnection between Society and Business.

3 The five forces Porter’s five forces tool is simple but powerful especially when it comes to evaluating the business because it help in understanding both the strength of the current, competitive position and the strength of the position in which one is aiming to achieve in the market. It enables one to take advantage of the present situation of strength to improve any situation that is associated to weakness. Moreover, it is used to identify new products, services and/or businesses that have the potential of making a profit.

This analysis presumes that there are five crucial forces that determine competitive power in any given situation (Porter 2008). 1 Supply power Supply power allows you to understand how suppliers accelerate prices in the market. This is particularly present in the number of suppliers with regard to key input, the exceptionality of their products/services, they strength plus the control they have over you. Moreover, the issue of switching from one supplier to another is also witnessed. Essentially, the few choices you have in suppliers, the more need of suppliers’ help especially due to their power.

2 Buyer power Buyer power gives a chance to evaluate the easiness in which buyers can bring prices down. It is mostly influenced by the number of buyers’ especially individual buyers in one’s business including the cost of them moving from one buyer to another. However, dealing with few powerful buyers can be challenging as they may be forced to dictate purchasing terms to the seller. 3 Competitive Rivalry Competitive Rivalry indicates the number and ability of competitors that are present.

In case, several competitors are offering equal attractive products /services, then there is a likely hood of little power in the situation. Suppliers and buyers have the greatest impact in the market, in that if they are not offered good