Strategy Assessment 2 - Essay Example

Current paper presents the strengths and weaknesses of a well-known theoretical framework, the Five Forces model of Porter in regard to industry competition. The Porter’s Five Forces model is based on the following rule: each organization is likely to face five forces; the ability of the organization to face these forces denotes the level of competitiveness of the particular organization (Onkvisit and Shaw 2004, p.33). The specific model is commonly used for estimating the level of competitiveness of organizations and nations.

The Five Forces which each organization and nation have to face are the following: ‘industry competition, customers, suppliers, new entrants and substitute products’ (Onkvisit and Shaw 2004, p.32). The review of the literature related to this subject has led to the following assumption: the Five Forces model of Porter is a unique tool in measuring an organization’s or country’s competitiveness. Still, in the context of the international market, the use of the specific framework is not at the levels expected, a fact that it is rather related to the framework’s weaknesses, as discussed below.

Moreover, the high level of criticism developed against the Five Forces model of Porter leads to the assumption that the particular framework should be reviewed and updated so that it responds to the current market conditions and demands. 2. Strengths and weaknesses of theories of competitive advantage – M. Porter’s Five Forces theory 2.1. Strengths The Five Forces model of Porter could be characterized as a unique strategic tool in terms of its value in measuring performance. The potentials of the specific model to be used as a tool for measuring performance are important, but not standardized, as also explained in the next section.

One of the most important advantages of the particular model seems to be its simplicity. Indeed, as noted in Hill and Jones (2009) the Porter’s Five Forces model describes clearly the forces that each organization and nation is expected to face in regard to a particular industry/ market. There can be no misunderstanding in regard to the parts of the particular model since all these parts have certain characteristics that secure these parts’ uniqueness (Hill and Jones 2009). For example, when referring to the bargaining power of suppliers, a specific idea is implied: that suppliers can be more or less powerful in imposing particular prices, according to the level at which their products are unique or not (Hill and Jones 2009).

In addition, the Five Forces model highlights the importance of ‘strategic position for the acquisition of a competitive advantage’ (Roy 2011, p.25). In fact, these two concepts, strategic position and competitive advantage are closely related to the Five Forces model that has emphasized, for the first time, on the potential value of strategic position for enhancing competitiveness, either at the level of organization or the level of nation (Roy 2011, p.25). Moreover, the Five Forces model refers, also for the first time, to the potentials of a nation to acquire a competitive advantage in the same context as an organization (Roy 2011, p.25). In other words, in regard to competitiveness, organizations are equalized to nations (Roy 2011, p.25). The above fact indicates the potentials of markets to act as bonds between frameworks of different characteristics, as in the case of organizations and nations (Roy 2011