The Relevance Of Porter’s Five Forces In Today’s Innovative And Changing Business Environment

Gerard H. Th. Bruijl

Abstract


Porter’s five forces framework (rivalry existing competitors, threat of new entrants, power of suppliers and buyers, substitut products and services) is based on the perception that an organizational strategy should encounter the opportunities and threats in the organizations external setting. A competitive strategy should rest on an understanding of industry structures and the way they change. Porter argues that the aim of the strategist is to recognize and handle a competitive environment by directly looking at competitors, or to contemplate a broader perspective that competes against the organization (Porter, 1979). Arguably, technological advancements and different ways of strategic thinking, such as shaping the future, engaging with customers, and creating long-term value using innovative ways may have shifted Porter’s five forces thinking from competing in an existing competitive environment to seeking opportunities in new innovative markets. However, one may wonder, if organizations are up to par for stepping out of their current competitive market to become a pioneer in a new market environment. This paper outlines and focuses on the relevance of Porter’s five forces today and its appropriateness when managers are considering innovation and change. Additionally, there will be an exploration of alternative strategies that have similarities with Porter’s five forces.

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