Porter's Five Forces

Porter's Five Forces
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Storyboard Description

Analyse the relationship between strategic planning and the success of an organization

Storyboard Text

  • That's a great question to ask before opening a business or company. You can use Porter's Five Forces in order to analyze the business environment
  • Hello, Luana I'm very happy you agreed to have this meeting. As I told you I would like to have my own restaurant and would like to know what challenges I might face.
  • Great question, I'll explain it to you. Porter's Five Forces is a tool framework for analyzing competition of a business. It is an important tool for understanding the forces that shape competition within an industry. It's also useful for helping you to adjust your strategy to suit your competitive environment and to improve your potential profit.
  • But, what is Porter's Five Forces?
  • New Entrants
  • Supplier Power
  • Competitive Rivalry
  • Buyer Power
  • Substitutes
  • So, how can I use it to analyze whether I should or not have a restaurant?
  • Caio Raymond is deciding whether to switch career and become the owner of a restaurant. He always loved cooking and does not feel happy at his current job, therefore, he decides to look for a friend who will tell him whether it is a good idea or not.
  • The competitive rivalry in the clothes industry is very high. Many brands offer similar products, thus, making fashion retailer operate in a very intense environment.
  • Luana explains what Porter's Five Forces are
  • Bargaining power of buyers is high since customers can choose from several alternative and change among brands with facility
  • Luana explains how Porter's Five Forces is composed of 5 forces that make up the competitive environment and which can erode a company's profitability. 
  • Threat of new entrants is weak in the fashion industry. The fashion industry consists of many brands, therefore, it is very difficult for a new brand to be successful. Many brands come with many different products, thus, for a new brand to be successful it is required to have a significant level of differentiation.
  • Luana helps Caio apply Porter's Five Forces to his business
  • Bargaining power of suppliers is not a significant force in the fashion industry since many companies source their products from different suppliers.
  • Luana helps Caio apply Porter's Five Forces to his business
  • The threat of substitution is quite high due to the intense competition in the fashion industry. In the fashion industry, companies face competition from high end to low end. Thus, even if the clothes the brand is selling do not have direct substitutes, the brand itself has many.
  • Luana helps Caio apply Porter's Five Forces to his business
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