Chapter 9 Porters Five Forces and Generic Strategies
Published: January 2016
Component type: chapter
Published in: Enterprise and its Business Environment
Parent DOI: 10.23912/978-1-910158-78-4-2851
Competition is what keeps organizations and industries alive. Harvard Business School Professor, Michael Porter, was keen to understand the drivers of success in commercial organizations. His research indicated that industry structure mattered more than individual firm behaviour and his Five Forces model (1979) offers his explanation of the sources of competition at industry level. The model is based on the theory of determining the competitive intensity and attractiveness of a market. The five forces within the model include: competitive rivalry, threat of new entry, supplier power, buyer power, and threat of substitution. The model has been widely used by firms to analyse the external environment and specific external forces like competition, government policies, and social and cultural forces (Vining, 2011). Furthermore, to overcome such fierce competition created by the Five Forces model, and to ensure successful survival, Porter (1985) also introduced competitive strategies to gain a competitive advantage. By combining price and market type, Porter suggests these competitive strategies: cost leadership, differentiation, and market segmentation (or focus) to enable a competitive environment to prosper. This chapter concentrates on establishing and understanding the Five Forces model and the generic strategies.
- Norin Arshed (Author) http://orcid.org/0000-0002-6775-1840
- Jaydeep Pancholi (Author)
For the source title:
- Norin Arshed, Heriot-Watt University (Editor) http://orcid.org/0000-0002-6775-1840
- Julie McFarlane, Heriot-Watt University (Editor) http://orcid.org/0000-0002-2612-9836
- Robert MacIntosh, Heriot-Watt University (Editor) http://orcid.org/0000-0001-7333-0201
Arshed & Pancholi, 2016
Arshed, N. & Pancholi, J. (2016) "Chapter 9 Porters Five Forces and Generic Strategies" In: Arshed, N., McFarlane, J. & MacIntosh, R. (ed) . Oxford: Goodfellow Publishers http://dx.doi.org/10.23912/978-1-910158-78-4-2922
Akan, O., Allen, R. S., Helms, M. M., & Spralls III, S. A. (2006). Critical tactics for implementing Porteru2019s generic strategies. Journal of Business Strategy, 27(1), 43-53. https://doi.org/10.1108/02756660610640173
Barney, J. (1986). Strategic factor markets: expectations, luck, and business strategy. Management Science 32, 1231-1241. https://doi.org/10.1287/mnsc.32.10.1231
Bridoux, F. (2004). A resource-based approach to performance and competition: an overview of the connections between resources and competition. Luvain, Belgium Institut et de Gestion, Universite Catholique de Louvain. Available at: https://www.uclouvain.be/cps/ucl/doc/iag/documents/WP_110_Bridoux.pdf
Consumers International (2012). The relationship between supermarkets and suppliers: What are the implications for consumers? www.consumersinternational.org/
Cox, A. (2001). Understanding buyer and supplier power: a framework for procurement and supply competence. Journal of Supply Chain Management, 37(1), 8-15. https://doi.org/10.1111/j.1745-493X.2001.tb00094.x
Dostaler, I. and Flouris, T. (2006). Stuck in the middle revisited: The case of the airline industry. Journal of Aviation/Aerospace Education and Research, 15(2), 6.
Garau, C. (2007). Porter's generic strategies: a re-interpretation from a relationship marketing perspective. The Marketing Review 7(4), 369-383. https://doi.org/10.1362/146934707X251128
Grimm, H. (2006). Entrepreneurship policy and regional economic growth: Exploring the link and theoretical implications. In Rihoux, B. and Grimm, H. (eds.) Innovative Comparative. Methods for Policy Analysis Beyond the Quantitative-Qualitative Divide USA: Springer. https://doi.org/10.1007/0-387-28829-5_6
Grundy, T. (2006). Rethinking and reinventing Michael Porter's Five Forces model. Strategic Change 15, 213-229. https://doi.org/10.1002/jsc.764
Hambrick, D.C. (1983). High profit strategies in mature capital goods industries: A contingency approach. Academy of Management Journal 25, 687-707. https://doi.org/10.2307/255916
IATA (2014, 2015) International Air Transport Association, http://www.iata.org/Pages/default.aspx [Accessed April 2015].
Kumar, K. and Subramanian, R. (2011). Porter's strategic types: Differences in internal processes and their impact on performance. Journal of Applied Business Research 14(1), 107-124. https://doi.org/10.19030/jabr.v14i1.5732
MacIntosh, R. and MacLean, D. (2015). Strategic Management: Strategists At Work. London: Palgrave Macmillan. https://doi.org/10.1007/978-1-137-03545-5
Miles, P., Miles, G. and Canon, A. (2012). Linking servicescape to customer satisfaction: exploring the role of competitive strategy. International Journal of Operations & Production Management 32(7), 772-795. https://doi.org/10.1108/01443571211250077
Miller, D. (1988). Relating Porteru2019s business strategies to environment and structure: Analysis and performance implications. Academy of management Journal 31(2), 280-308. https://doi.org/10.2307/256549
Murray, A.I. (1988). A contingency view of Porteru2019s u2018Generic Strategiesu2019. Academy of Management Review 13(1), 390-400. https://doi.org/10.5465/AMR.1988.4306951
Pertusau2010Ortega, E.M., Molinau2010Azoru00edn, J.F. and Claveru2010Cortu00e9s, E. (2009). Competitive strategies and firm performance: a comparative analysis of pure, hybrid and u2018stucku2010inu2010theu2010middleu2019 strategies in Spanish Firms. British Journal of Management 20(4), 508-523. https://doi.org/10.1111/j.1467-8551.2008.00597.x
Peteraf, M. and Barney, J. (2003a). Unraveling the resource-based tangle. Managerial and Decision Economics 24, 309-323. https://doi.org/10.1002/mde.1126
Peteraf, M. and Bergen, M. (2003b). Scanning dynamic competitive landscapes: a market-based and resource-based framework, Strategic Management Journal 24, 1027-1041. https://doi.org/10.1002/smj.325
Porter, M.E. (1979). How competitive forces shape strategy. Harvard Business Review 57(2), 137-145
Porter M.E. (1980). Competitive Strategy. New York: Free Press.
Porter, M.E. (1985). Competitive Advantage. New York: Free Press.
Porter, M.E. (1998). Competitive Strategy. New York: Free Press.
Porter, M.E. (1996). What is strategy? Harvard Business Review 74(6), 61-78.
Porter, M.E. (2008) The five competitive forces that shape strategy. Harvard Business Review 86(1), 25-40.
Shugan, S.M. (2005). Brand loyalty programs: are they shams? Marketing Science 24(2), 185-193. https://doi.org/10.1287/mksc.1050.0124
Spanos, Y.E., Zaralis, G. and Lioukas, S. (2004). Strategy and industry effects on profitability: evidence from Greece. Strategic Management Journal 25,139u2013165. https://doi.org/10.1002/smj.369
Speed, R.J. (1989). Oh Mr Porter! A re-appraisal of competitive strategy. Marketing Intelligence and Planning 7(5/6), 8-11. https://doi.org/10.1108/EUM0000000001043
The Economist (2014). Why airlines make such meagre profits. The Economist (February 2014).
Topham, G. (2015). Malaysia Airlines u2018technically bankruptu2019 as new chief seeks to shed 6,000 jobs. The Guardian: http://www.theguardian.com/business/2015/jun/01/malaysia-airlines-technically-bankrupt-christoph-mueller-cuts-boss
Vining, A.R. (2011). Public agency external analysis using a modified u201cFive Forcesu201d framework, International Public Management Journal 14(1), 63-105. https://doi.org/10.1080/10967494.2011.547819
Wang, J., Bonilla, D. and Banister, D. (2015) Air deregulation in China and its impact on airline competition 1994u20132012. Journal of Transport Geography. (in press) http://dx.doi.org/10.1016/j.jtrangeo.2015.03.007 https://doi.org/10.1016/j.jtrangeo.2015.03.007
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180. https://doi.org/10.1002/smj.4250050207
White, R.E. (1986). Generic business strategies, organizational context and performance: An empirical investigation. Strategic Management Journal 7, 217-231. https://doi.org/10.1002/smj.4250070304