Porter’s Five Forces
Fuad Khan, Date (29 November 2010)
Mercyhurst College, Erie PA
Advanced Analytic Techniques Course
Purpose
The purpose of my paper is to assess the value of Porter's Five Forces method to formulate a
winning strategy in Central Command (CENTCOM) market space and a personal test case. The
analytic question used to test the Porter's Five Forces analytical technique is as given: "Is
company TNISO in a position to win contracts for Open Source Intelligence services focusing
on the Middle East and South East Asia with Central Command?”
The criteria used to evaluate the Porter's Five Forces method shown below:
 Formulation of competitive business strategy: Formulate a competitive business
strategy to win contracts in CENTCOM market.
 Repeatability: Repeatability of using Porter's Five Forces method in other markets
 Ease of use: How easy is it to create a potential winning business strategy using Porter's
Five Forces method,
Porter's Five Forces analytic method is the most appropriate method to critically analyze a
potential market space like U.S. Central Command and produce a winning strategy on how to
capture a market segment in this market.
Literature Review
Most authors used Porter’s Five Forces analytical techniques to understand the competitive
forces in a particular industry and gain competitive advantage in an industry. Two authors WeiMing and Irene Siaw clearly used differentiation strategies to counter the competitive forces in a
internet banking industry. The other authors performed in-depth survey of competitive forces in
the industry. The authors also found competitive forces, which were weak and not relevant.
Generally, all authors used Porter’s Five Forces to gain a competitive advantage in the industry,
outperform, and dislodge incumbents in the industry. Michael E. Porter in his paper defined the
Porter Five Forces analytical method. He also cautioned that a strategy analyst could undermine
the industry structure by creating new kinds of competition, which will not allow any company
to win in the industry. Wei-Ming and Kang-Wei found the competitive forces in the Taiwanese
public sector industry using Porter’s Five Forces analytical method and then used cost leadership
and service differentiation strategies to counter the competitive forces in the Taiwanese public
sector industry. Both researchers also found professional services firms deeply impacted by
competitor rivalry. Competitors can use price reduction, service enhancement and social
networks to win contracts. Irene Siaw and Alec Yu also used Porter’s Five Forces to find
competitive forces exerted by internet in the banking industry. Both authors also advocated the
use of product differentiation strategy to counter competitive forces in the banking industry.
Irene and Alec also found that the internet has lowered the barriers to entry in most industries, a
fact applicable to other service industries also. Yeo and Huang explored competitive forces in
mobile phone e-commerce industry. They found brand names are significant barriers to entry
into the mobile phone e-commerce industry. It is very hard to capture market share from an
established industry player with established brand name. Risk of business failure or collapse is
high if incorrect or irrelevant competitive forces are identified in an industry. Academic
researcher Sritkant Parthasarathy explored the competitive forces in Indian business industry.
Sritkant found state protectionism and lack of infrastructure to be barriers to entry in an Indian
industry. He also found suppliers in developing countries could pressure incumbents by
providing low quality products. Moreover, buyers are fixated and sensitive to price of a product
than quality of a product. Carle, Axhausen and Wokaun studied the competitive forces in the fuel
cell market using Porter’s Five Forces. These researchers modified Porter’s Five Forces to
include three additional competitive forces namely infrastructure and fuel, government policy
and investments. The found market penetration of fuel cell technology is heavily dependent on
government incentives and subsidies. This means new technologies, which do not have
government backing, might have a very high time penetrating a market with deeply entrenched
incumbents like the U.S. oil industry. Prescott and Grant evaluated 21competitive strategies
including Porter’s Five Forces. They found Porter’s Five Forces is costly for small business.
Each research project for studying the competitive market forces takes $10,000 to $50,000. Both
researchers advocated use of Case study, personal interviews and literature search to collect data
for Porter’s Five Forces. Prescott and Grant also stated the accuracy of Porter’s Five Forces is
highly dependent upon the technical, interpersonal, conceptual, diagnostic and analytical skills of
the analyst.
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Description
Porter's Five Forces analytical technique is a methodology used for analyzing the competitive
forces in any market and helping the strategy analyst formulate a competitive winning strategy
for the enterprise. Porter's Five Forces analytical method was created by Harvard Business
School professor, Michael Porter, to analyze the attractiveness and likely-profitability of an
industry and how a company can formulate a winning strategy to take advantage of the market
forces within that industry. Since publication, it has become one of the most important business
strategy tools. The classic article, which introduces it, is "How Competitive Forces Shape
Strategy “in Harvard Business Review 57, March – April 1979, pages 86-93. Given below is the
diagram depicting Porter's Five forces that shape industry competition.
Figure 1 Porter's Five Forces that shape industry competition
Porter’s five forces are threat of new players in the market, bargaining power of the suppliers,
bargaining power of the buyers, threat of substitute services, and rivalry amongst existing
competitors in the market place. Analyst can apply the Porter’s Five Forces using the steps given
below:
 Threat of new entrants to an industry: New entrants into an industry start price wars, gain
market share and bring disruptive technology into the industry.
 The power of suppliers in an industry: Suppliers have power in an industry, if they supply
unique product not found elsewhere.
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


The power of buyers in an industry: Buyers can be very powerful and companies
typically have very low negotiating power against strong buyers. Strong buyers can also
set prices and play one competitor against another competitor.
Threat of substitute Services/Products: An industry competitive structure is affected by
introduction of a substitute service/product.
Rivalry among existing competitors: Rivalry amongst competitors in a market space can
affect profitability in the industry and make it unattractive for new entrants into the
market space. Established competitors with highly successful examples of past
performance can be very hard to dislodge.
Porter's Five Forces analytical methodology can be used by an intelligence analyst in
analyzing strategic intelligence problems. For example a U.S. intelligence analyst at the
office of Director of National Intelligence (DNI) economic section can provide a
competitive strategy for making U.S. companies more competitive in a Chinese or Indian
markets thereby gaining a foothold in both these markets, or vice versa analyze how
Chinese and Indian companies are using competitive forces in U.S. market to gain a
foothold in the U.S. market space. The strength of the Porter's Five Forces analytical
methodology is how it allows the analyst to analyze buyer power in an industry, threat of
new entrants in an industry, bargaining power of suppliers, threat of substitute products,
and rivalry amongst existing competitors. By analyzing all the five forces shown above,
the strategy analyst can keep the overall structure of the industry in mind instead of
focusing on any one force. Porter's Five Forces analytical methodology can assist in
forecasting the competitive strategy of a firm in any market space. By studying the
competitive forces in a market, the analyst can perform a more reliable job of forecasting
the competitive positions of any enterprise in any industry. The Porter Five Forces
analytical methodology can be a powerful tool in the toolbox of an intelligence analyst
performing economic analysis of rival nation enterprises. The weakness of Porter's Five
Forces analytic method is that the strategy analyst can misuse Porter’s Five Forces
method to undermine the industry structure, creating new types of competition, which do
not allow any company to win in the industry. The strategy analyst can also mistake
certain attributes of the industry as its underlying forces for example; government
regulation is not a one of the Porter’s Five Forces in an industry but a factor influencing
the Porter’s Five Forces. (Porter, 2008)
Sources: Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from
http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr
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Strengths and Weaknesses
Strengths
 Strategy analyst can effectively analyze buyer power in an industry: Porter's Five Forces
analytical method allows the analyst to analyze the buyer's market influence and power.
Strong buyers have the ability to manipulate the industry and initiate price wars between
industry players.
 Strategy analyst can effectively analyze threat of new entrants in an industry: Porter's Five
Forces analytical method allows the analyst to analyze the threat of new entrants in an
industry. If barriers to entry are low for an industry, for example in internet banking, then
every new company with a stellar idea can be successful in the industry. Low barriers of
entry can be bad for incumbent players in the market place and good for new companies
wanting to enter the market place.
 Strategy analyst can effectively analyze bargaining power of suppliers: Porter's Five
Forces analytical method allows the analyst to analyze the bargaining power of suppliers.
In cases like computer chip manufacturers who have rely heavily on silicon
manufacturers, the suppliers can be very powerful and will use their power to sell
products at above market rates. In other industries like professional services firms, there
are no strong suppliers as the professional services firms market their human capital. In
addition, human capital can be easily found in most instances.




Strategy analyst can effectively analyze threat of substitute products : Porter's
Five Forces
analytical method allows the analyst analyze the threat of substitute products. If substitute
products exist in the market, for example how many different types of facial soaps are
being sold in the U.S. supermarket at least ten dollars? The large number of choices in
facial soaps creates a powerful competition amongst the soap producing companies. The
only way such companies can be successful is via differentiation and price competition.
Strategy analyst can effectively analyze rivalry amongst existing competitors: Porter's
Five Forces analytical method allows the analyst to effectively analyzed rivalry existing
amongst competitors. If there is strong rivalry amongst competitors for example between
Intel Corporation and AMD Corporation, both producing computer-processing chips
(CPU) for computers. The rivalry between incumbents in a market place can typically
lead to price wars, which damage both competitors. Normally it is seen that competitors
follow certain rules allowing both competitors to have a market share in the industry. It is
rare to see a sole incumbent in a market place, such a position in the market place is not
viable for long, and usually a competitor comes along to upset the sole incumbent in the
market place.
Structured Approach: Strategy analyst has a structured approach to examine competitive
forces affecting industries.
Basis for other in-depth analysis: Porter’s Five Forces analytical method provides
additional information for an in-depth analysis.
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Weaknesses


Strategy analyst can use Porter’s Five Forces method to undermine the industry structure,
creating new types of competition, which do not allow any company to win in the
industry.
Strategy analyst can mistake certain attributes of the industry as its underlying forces for
example; government regulation is not a one of the Porter’s Five Forces in an industry
but a factor influencing the Porter’s Five Forces.
Michael E. Porter the author of Porter's Five Force's analytical techniques provided the above
strengths and weakness of Porter’s Five Forces.
Sources: Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from
http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr
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How-To Use Porter’s Five Forces analytical method: The following five steps shown
below depict how to apply Porter’s Five Forces analytical model to any intelligence problem. In
all five steps shown below the analyst will use research tools like strategic business intelligence
databases, open source internet research, interviews with industry experts, focus groups,
market/consumer surveys and financial reports to gather competitive information about market
forces. Examples of strategic business intelligence databases could be LexisNexis, Dun &
Bradstreet, Frost & Sullivan, Gartner, Global Insight, Stratfor, and Plunkett Research. A pictorial
model of the Porter's Five Forces analytical model is given below:
Figure 2 Pictorial representation of Porter's Five Forces
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Step #1 Analyze barriers to entry into an industry: Use research tools to find the sources of
barriers to entry into an industry. Analyst could focus on barriers to entry in an industry for
example; economics of scale, product differentiation, capital requirement and switching costs.
Step #2 Analyze bargaining power of buyers in an industry: Use research tools find out the
buyer’s influence and power in the industry. Analyst could examine buyer influence by looking
at volumes purchased by the buyers, differentiation in products and switching costs.
Step #3 Analyze bargaining power of suppliers in an industry: Use research tools to find out the
supplier’s influence and power in the industry. Analyst could examine supplier influence and
power by checking the number of suppliers, lack of substitute products in the industry and how
important is the supplier’s product to the firm.
Step # 4: Analyze threat of substitute products: Use research tools to find the threat of substitute
products in the industry. Analyst can examine if there are substitute products in the industry,
what are their pricing in the industry.
Step # 5: Analyze intensity of rivalry among existing competitors: Use research tools to find the
intensity of rivalry amongst existing competitors. Analyst can examine if there is intense rivalry
amongst existing competitors in the market. Intense competitor rivalry can trigger damaging
price wars in the industry.
Step # 6: Compile all five forces into Porter’s Five Forces frame work: Compile all five forces
shown above into Porter’s Five Forces analytical framework for better understanding. Identify
the most powerful and threatening competitive market force preventing your company from
being successful in the market place. Formulate a competitive strategy against the most imminent
market threat to your company.
Step # 7: Identify industry opportunities using Porter's Five Forces framework: Repeat the
process with your own company as the subject and identify opportunities in the last step instead
of threats.
Sources: Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from
http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr
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Personal Test Case
I applied Porter’s Five Forces analytical method on the analytical question “Is company TNISO
in a position to win contracts for Open Source Intelligence services focusing on the Middle East
and South East Asia with Central Command?” I used the following three criteria to evaluate the
Porter's Five Forces:
 Formulation of competitive business strategy: Formulate a competitive business
strategy to win contracts in CENTCOM market.
 Repeatability: Repeatability of using Porter's Five Forces method in other markets
 Ease of use: How easy is it to create a potential winning business strategy using Porter's
Five Forces method,
Porter's Five Forces analytic method is the most appropriate method to critically analyze a
potential market space like U.S. Central Command and produce a winning strategy on how to
capture a market segment in this market. The following seven steps will depict how I applied
Porter’s Five Forces analytical method on the analytical question.
Step #1 I researched and analyzed barriers to entry into USCENTCOM market space: I used
specialized research tools such as Figure 3 to find the sources of barriers to entry into an
industry. Analyst could focus on barriers to entry in an industry for example; economics of scale,
product differentiation, capital requirement and switching costs. Step 1 partially fulfilled the first
criteria; it partially helps in the formulation of successful competitive strategy in an industry.
Step 1 also successfully fulfilled the repeatability criteria. Step 1 scored low in the third criteria;
the collection of data for barriers into an industry is not an easy task.
Figure 3 Specialized databases used to perform literature search for Porter's Five Forces analytical method
Step #2 I researched and analyzed the bargaining power of a single buyer the U.S. Government.
I used research tools shown in figure 3 to find out the U.S. government’s influence and power in
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the industry. I examined U.S. Government influence by looking at volumes purchased by the
U.S. Government, differentiation in products and switching costs. In our personal case the there
is a singular very strong buyer with strict regulations i.e. U.S. Government. Step 2 partially
fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in
an industry. Step 1 also successfully fulfilled the repeatability criteria. Step 2 scored low in the
third criteria; the collection of data for barriers into an industry is not an easy task.
Step #3 I analyzed bargaining power of suppliers in an industry: I used specialized research tools
to find out the supplier’s influence and power in the industry. For my personal test case, there are
no suppliers as in my personal case we are providing professional services to a single buyer the
U.S Government. My analytical question is providing professional services not a product to the
U.S. Government. Step 3 partially fulfilled the first criteria; it partially helps in the formulation
of successful competitive strategy in an industry. Step 3 also successfully fulfilled the
repeatability criteria. Step 3 scored low in the third criteria; the collection of data for barriers into
an industry is not an easy task.
Step # 4: I analyzed threat of substitute products in the USCENTCOM market. I used
specialized research tools to find the threat of substitute products in the industry. I researched
and examined if there are substitute products in the industry, what are their pricing in the
USCENTCOM industry. Step 4 partially fulfilled the first criteria; it partially helps in the
formulation of successful competitive strategy in an industry. Step 4 also successfully fulfilled
the repeatability criteria. Step 4 scored low in the third criteria; the collection of data for barriers
into an industry is not an easy task
Step # 5: I analyzed the intensity of rivalry among existing competitors in the USCENTCOM
market space. I used specialized research tools shown in figure 4 to find the intensity of rivalry
amongst existing competitors. I researched and examined if there is intense rivalry amongst
existing competitors in the USCENTCOM market space. Intense competitor rivalry can trigger
damaging price wars in the industry. Step 5 partially fulfilled the first criteria; it partially helps in
the formulation of successful competitive strategy in an industry. Step 5 also successfully
fulfilled the repeatability criteria. Step 5 scored low in the third criteria; the collection of data for
barriers into an industry is not an easy task
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Figure 4 Centurion research solutions specialized research website used to collect and analyzed rivalry
amongst incumbents in an industry
Step # 6: I compile all five forces into Porter’s Five Forces framework shown in figure 2. I
Identified the most powerful and threatening competitive market force preventing TNISO from
being successful in the USCENTCOM market place. I formulated a competitive strategy to
counter the most imminent market threat to TNISO. Strategies to counter the strongest
competitive forces could be price leadership, service differentiation, increased focus or a
combination of all three strategies. Step 6 partially fulfilled the first criteria; it partially helps in
the formulation of successful competitive strategy in an industry. Step 6 also successfully
fulfilled the repeatability criteria. Step 6 scored low in the third criteria; the collection of data for
barriers into an industry is not an easy task
Step # 7: I identified industry opportunities using Porter's Five Forces framework shown in
figure 2. You would repeat the process with your own company as the subject and identify
opportunities in the last step instead of threats. Step 7 fully fulfilled the first criteria; it partially
helps in the formulation of successful competitive strategy in an industry. Step 7 also
successfully fulfilled the repeatability criteria. Step 7 scored low in the third criteria; the
collection of data for barriers into an industry is not an easy task
Porter’s Five Forces analytical method completely fulfilled the first criteria, which called for a
successful formulation of competitive strategy in an industry. Porter Five Forces analytical
method also fulfilled the second criteria, which called for the analytical method to be used in
other industries. Porter’s Five Forces scored low in the third criteria i.e. ease of use. Porter’s Five
Forces is not recommended for small companies with limited research budget.
Primary challenge in using Porter’s Five Forces was the time taken to collect, analyze and
dissemination of information. To overcome this challenge I had used specialized research
websites with paid subscription.
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For Further Information
Please consult the following resources given below for further information pertaining Porter’s
Five Forces analytical technique.
Porter, Michael E. (1998). Competitive strategy: techniques for analyzing industries and
competitors. New York, New York: Free Press.
Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy - Harvard Business
Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-fivecompetitive-forces-that-shape-strategy/ar/pr
Porter, M., How Competitive Forces Shape Strategy. Harvard Business Review, March-April
(1979), p. 8.
Prescott, J. E., & Grant, J. H. (1988). A Manager's Guide for Evaluating Competitive Analysis
Techniques. Interfaces, 18(3), 10-22. Retrieved from EBSCOhost.
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Annex 1. Detailed Literature Review
Given below are seven detailed literature reviews defining what is Porter’s Five Forces
analytical technique and then providing examples of how Porter's Five Forces have been used to
research competitive forces in a industry. After researching the competitive forces in an industry,
a winning strategy is formulated to gain a winning position in the market. Leadership and
differentiation strategies are also used to counter the competitive forces in an industry.
The Five Competitive Forces That Shape Strategy
Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy - Harvard Business
Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-fivecompetitive-forces-that-shape-strategy/ar/pr
Name of Analytic Technique
Porter’s Five Forces
Purpose
The purpose of this article is to inform and advocate the use of Porter's Five Forces analytical
technique in formulation of a competitive strategy. We create the competitive strategy
formulated by analyzing the underlying five forces in an industry. In this article, the creator of
Porter’s Five Forces analytic technique economist and Harvard University professor Michael E.
Porter advocates and reaffirms the workings of the Porter’s Five Forces analytic technique.
Strengths and Weaknesses
Strengths:
1. Analyzes buyer power in a industry
2. Analyzes threat of new entrants in a industry
3. Analyzes bargaining power of suppliers
4. Analyzes threat of substitute products
5. Analyzes rivalry amongst existing competitors
6. By considering all the five forces shown above, the strategy analyst can keep the overall
structure of the industry in mind instead of focusing on any one force.
Weaknesses:
1. Strategy analyst can use Porter’s Five Forces method to undermine the industry structure,
creating new types of competition, which do not allow any company to win in the
industry.
2. Strategy analyst can mistake certain attributes of the industry as its underlying forces for
example; government regulation is not a one of the Porter’s Five Forces in an industry
but a factor influencing the Porter’s Five Forces.
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Description
Strategy analyst use’s Porter’s Five Forces analytical technique to create a competitive strategy
that takes into account the competitive forces in the industry. The competitive strategy will help
the company maintains its leadership in the industry and safeguard the company from attack by
rival competitors. Porter’s five forces are threat of new players in the market, bargaining power
of the suppliers, bargaining power of the buyers, threat of substitute services, and rivalry
amongst existing competitors in the market place. A brief overview of Porter’s Five Forces is
given below.
1. Threat of new entrants to an industry: New entrants into an industry start price wars, gain
market share and bring disruptive technology into the industry. For example, Netflix an
online movie rental company has gained market share from Blockbusters a chain of
video/game rental outlets. If barriers to entry into an industry are high, it becomes very
difficult for new entrants to gain market share. Government policy can become a major
barrier to entry into certain intelligence markets can only be served by U.S. companies with
U.S citizen employees. A small company providing open source intelligence services to the
U.S. Central Command market space will need to examine the barriers of entry into market.
2. The power of suppliers in an industry: A professional services company treats its employees
as input. The employees or suppliers for U.S. Central Command typically have to be U.S.
citizens with high-grade security clearances. Such a small pool of input to a company can put
pressure on the company to be competitive in an industry.
3. The power of buyers in an industry: U.S. Central Command or U.S. government is a very
powerful buyer in the defense contracting industry. Companies typically have very low
negotiating power with such strong buyer. Strong buyers can also set prices and play one
competitor against another competitor.
4. Threat of substitute Services/Products: An industry competitive structure is affected by
introduction of a substitute service/product. For example, small women owned business
Alaska based business employing in contract un-cleared employees in theater supplying open
source intelligence to U.S. Central Command could take away market share from U.S. based
company with cleared employees.
5. Rivalry among existing competitors: Rivalry amongst competitors in U.S. Central Command
market space can affect profitability in the industry and make it unattractive for new entrants
into the market space. Established competitors with highly successful examples of past
performance can be very hard to dislodge. Examples are defense contractors who are prime
contractors on U.S. Central Command contracts.
Steps to create a competitive strategy:





Analyze supplier bargaining power in U.S. Central Command market space.
Analyze buyer bargaining power in U.S. Central Command market space.
Analyze threat of new entrants in U.S. Central Command market space.
Analyze threats of substitutes in U.S. Central Command market space.
Analyze rivalry amongst competitors in U.S. Central Command market space.
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The strategy analyst will analyze all the five forces in the industry by performing market
research, talking to suppliers, buyers, examining substitute services/products and looking at
competitive analysis of incumbents in the industry.
USES:
Analysts can apply Porter’s Five Forces analytical technique to create a competitive strategy in
virtually any industry. We create a competitive strategy after performing analysis of the five
competitive forces driving market competition in any industry.
Comparison
Comparison is not required as this is the first source critique.
Sources Cited
The author has listed the following sources given below. Adam M. Brandenburger and Barry J.
Nalebuff, Co-opetition (Currency Doubleday, 1996 Michael E. Porter, Competitive Advantage:
Creating and Sustaining Superior Performance (The Free Press, 1998) Michael E. Porter,
“Strategy and the Internet” (HBR, March 2001).
Most Informative
The most informative item of this source is the detailed explanation of what is Porter's Five
Forces analytical method, how can it be applied to formulate a competitive strategy in any
industry, what are the pitfalls to avoid and benefits of using this method.
Source Author
Michael E. Porter is the author of this article. Mr. Porter is also the creator of the Porter’s Five
Forces analytic method. Mr. Porter is very qualified to talk objectively about this analytic
method as he has created this method and used it extensively in various industries.
Source Reliability
Dax Norman’s trust evaluation worksheet is not used to check the source reliability, as this is not
an online web source, but an article written by the creator of the Porter’ Five Forces analytical
technique.
Critique Author
Fuad Khan
fuadkhan@yahoo.com
Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
12/19/2010.
Link to my wiki: http://intel520.wikispaces.com/
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Use of Leadership and Differentiation Strategies by Professional Service Firms: A
Case Study
Wei-Ming, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies by
Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477488. Retrieved from Business Source Elite database.
Name of Analytic Technique
Porter's Five Forces
Purpose
The purpose of the article is to study the strategic positioning of a transportation engineering
services firm in the Taiwanese public sector market space.
Strengths and Weaknesses
The strategic researchers Wei-Ming and Kang-Wei did not list any strength or weakness of the
Porter's Five Forces analytical method in their case study.
Description
Strategic researchers Wei-Ming and Kang-Wei obtained a comprehensive understanding
of competitive market forces affecting professional transportation engineering firm in the
Taiwanese public sector market space using the Porter's Five Forces analytical method.
Uses
This case demonstrates that Porters Five Forces can be used to analyze the market forces
influencing the transportation industry.
Comparison
The strategic researchers Wei-Ming and Kang-Wei used Porter’s Five Forces in their case study
of analyzing the market forces in Taiwanese transportation engineering industry. The first source
critique article found at Porter, Michael, E. (2008). The Five Competitive Forces That Shape
Strategy - Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from
http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr. Described how to
use the Porter's Five Forces analytical technique by the technique's author.
Most Informative
The article helped me understand the following points:
A. Cost leadership is essential for professional services firms selling to strong buyers.
B. Service differentiation is very important for professional services firm, in order for them to
stand out from the crowd.
C. New professional services firms usually lack experience and human capital to bid for large
projects. They may need sub-prime partners in a contract.
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D. Professional services firms impacted by competitor rivalry. Competitor use price reduction,
service enhancement and social networks to win contracts.
E. The powerful buyer is the single most important threat to a professional transportation
engineering services firm in Taiwanese public sector market.
F. Results compiled by strategic researchers Wei-Ming and Kang-Wei can be re-used by other
strategy analysts in other professional transportation engineering services firms in other countries
and markets.
G. Porter's Five Forces methodology takes a time to research market forces and is not viable
for very short lead-time projects.
H. Porter's Five Forces methodology is more useful on strategic level and should not be used on
a tactical level.
Source Author
The two authors of this article are strategic researchers Wei-Ming and Kang-Wei who have
performed an in-depth strategic analysis of a professional transportation-engineering firm located
in Taiwan. The strategic researchers have used both the SWOT and Porter's Five Forces
methodology to formulate recommendations for professional transportation engineering services
firms.
Source Reliability
The source rated to have high credibility according to Dax Norman trust scale.
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18
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Control (8th ed,) New York: Irwin McGraw-Hill.
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137-145.
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competitive advantage: Choosing the dependent variable in empirical tests of the resource-based
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relationship to business unit performance. Strategic Management Journal, 9(1),43-60.
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representing turnover cognitions. Journal of Vocational Behavior, 53, 254-273.
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manufacturing strategy and the relationship to manufacturing performance. Strategic
Management Journal, 23(2), 105-117.
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514-523.
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19
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Critique Author
Fuad Khan
fuadkhan@yahoo.com
Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
01/06/2011
Link to my wiki: http://intel520.wikispaces.com/
20
An Analysis of the Impact of the Internet on Competition in the Banking Industry,
using Porter's Five Forces Model
Siaw, I., & Yu, A. (2004). An Analysis of the Impact of the Internet on Competition in the
Banking Industry, using Porter's Five Forces Model. International Journal of Management,
21(4), 514-523. Retrieved from Business Source Elite database.
Name of Analytic Technique
Porter's Five Forces
Purpose
Academic researchers Irene Siaw and Alec Yu wrote a paper on the emergence of the internet on
the competitive landscape of the banking industry. Both researchers advocate harnessing the
power of the internet in the banking industry.
Strengths and Weaknesses
Academic researchers Irene Siaw and Alec Yu did not discuss the strengths and weaknesses of
the Porter's Five Forces analytical model.
Description
Academic researchers Irene Siaw and Alec Yu studied how the internet was affecting
competitive dynamics of banking industry using the Porter's Five Forces analytical method.
Uses
This case demonstrates that Porters Five Forces can be used to analyze the market forces
influencing the internet banking industry.
Comparison
This article is similar in methodology to the used by strategic researchers Wei-Ming and KangWei (Wei-Ming, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies
by Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477488. Retrieved from Business Source Elite database.). The authors of both articles have
practically applied Porter's Five Forces to study the competitive forces present in Taiwanese
professional services industry and the banking industry. Both the articles present clear
instructions on how to apply Porter's Five Forces analytical technique.
Most Informative
I found the following items most informative in this article, which I can also use, in my final
project.
1. Porter's Five Forces analytical method can also be used in dynamic evolving industries to
formulate a competitive strategy. Using Porter's Five Forces the academic researchers Irene Siaw
21
and Alec Yu advocated the use of internet banking long before it became a successful and widely
used technology.
2. Internet has lowered the barriers of entry in most industries. With direct access to customers
and a more economical alternative distribution channel.
3. Product differentiation is very important otherwise, it is easy for the buyer to switch products.
This fact is also reinforced by article by strategic researchers Wei-Ming and Kang-Wei (WeiMing, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies by
Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477488. Retrieved from Business Source Elite database.).
Source Author
Academic researchers Irene Siaw and Alec Yu are the authors of this paper. Irene Siaw is an
academic researcher and Alec Yu works as head of Cisco Systems Wireless division Hong Kong.
Alec Yu as a Cisco Systems executive a company whose routers power the internet is in a unique
position to study the impact of the internet on competitive landscape of the banking industry.
Source Reliability
The source rated to have high credibility according to Dax Norman trust scale.
Sources Cited
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July 1999.
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the Internet, Van Norstrand Reinhold, New York, NY, pp. 271-305, 1998.
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Competitive Advantage, Macmillan Business, 1998.
Engelman, L., Interacting on the Internet, Times Mirror Higher Education Group, Boston, MA,
1996.
22
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Technology in Financial Services, 1999a.
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Humphreys, K., Banking on the Web - Security First Network Bank and the development of
Virtual Financial Institutions in Cronin, M.J. (Ed.), Banking and Finance on the Internet, Van
Norstrand Reinhold, New York, NY, pp. 75-105, 1998.
Kalakota, R. & Whinston, A., Electronic Commerce -A Manager's Guide, Addison- Wesley
Longman, USA, 1997.
Kiesnoski, K., Cyberbanks: Creating a Market Niche? Bank Systems & Technology, New York,
Vol. 36 (1999), No.5, pp. 30-36.
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Research: Electronic Networking Applications and Policy, Vol.8 (1998), No.4, pp. 331 - 337.
Porter, M., How Competitive Forces Shape Strategy. Harvard Business Review, March-April
(1979), p. 8.
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(1999), No.6, pp. 18-24.
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July 1999.
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Perspective, Orlando, FL: The Dryden Press, 2000
Critique Author
Fuad Khan
fuadkhan@yahoo.com Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
01/15/2011
Link to my wiki: http://intel520.wikispaces.com/
23
Mobile E-Commerce outlook
Yeo, J., & Huang, W. (2003). Mobile E-Commerce Outlook. International Journal of
Information Technology & Decision Making, 2(2), 313. Retrieved from Academic Search
Complete database.
Name of Analytic Technique
Porter's Five Forces
Purpose
Academic researchers Julia Yeo and Wayne Huang wrote a paper to identify and explore
potential business models in the mobile commerce industry using Porter's Five Forces analytical
model.
Strengths and Weaknesses
Two strengths of the Porter's Five Forces analytical model mentioned by the academic
researchers Julia Yeo and Wayne Huang. One the Porter's Five Forces analytical model provided
a complete evaluation of the mobile commerce industry. Secondly, the Porter's Five Forces
analytical model helped forecast areas of mobile commerce industry suitable for investment by
firms seeking to gain a market share of the mobile commerce industry. The academic researchers
did not discuss any weakness of the Porter's Five Forces model.
Description
Academic researchers Julia Yeo and Wayne Huang used Porter's Five Forces method to look at
competitive market forces present in the mobile commerce industry. The academic researchers
also used Porter's Five Forces to formulate a competitive strategy to gain a market share in the
mobile commerce industry.
Uses
This paper demonstrates that Porter's Five Forces analytical method can be used to analyze the
market forces influencing the mobile commerce industry.
Comparison
There is an interesting similarity between this paper and the study performed by strategic
researchers Wei-Ming and Kang-Wei (Wei-Ming, O., & Kang-Wei, C. (2007). Use of
Leadership and Differentiation Strategies by Professional Service Firms: A Case Study.
International Journal of Management, 24(3), 477-488. Retrieved from Business Source Elite
database.) Both the researchers used strength, weakness, opportunities, threats (SWOT) model in
conjunction with the Porter's Five Forces analytical method. Julia and Wayne used the Porter's
Five Forces analytical method to research the threats for their SWOT model.
Most Informative
Some of the informative takeaways from this article were
24



Brand names can be significant barrier to entry into an industry. It is very hard to capture
market share from established industry players with established brand name.
There is a grave almost fatal impact to a business if we create in-correctly identify the
wrong competitive forces in the industry and use those in Porter's Five Forces analytical
model. As the academic authors in the paper, stated the mobile commerce industry should
not duplicate the competitive forces existing in electronic commerce industry. Instead,
the researchers should find key differentiators like location awareness, which makes
mobile commerce industry radically different from electronic commerce industry.
The paper also points to lack of data from other mobile operators in other countries to get
a more diverse view and different of global mobile commerce industry. This is a very
important observation, as mobile industry has leapfrogged over traditional landline
internet in third world countries where landline internet is too expensive to install due to
both monetary reasons and geographic reasons. In most African countries, mobile
commerce like banking and money transfer is performed via cell phones. In Afghanistan,
most government employees are paid monthly via cell phones. Mobile commerce will
also expand with revolutionary devices like Apple Ipad, which allow a bigger screen and
more features useful for mobile commerce.
Source Author
Academic researchers Julia Yeo and Wayne Huang are the authors of this paper. Julia Yeo is an
academic student at The University of New South Wales, Australia. In addition, Wayne Huang is
an academic student at Ohio University, USA.
Source Reliability
The source rated to have high credibility according to Dax Norman trust scale.
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25
S. Eklund and K. Pessi, Exploring mobile e-commerce in geographical bound Retailing, Proc.
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450-455.
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14, 4 (1999) 375-386.
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September 2002).
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26
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http://www.wapforum.com/faqs/index.html
Critique Author
Fuad Khan
fuadkhan@yahoo.com
Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
01/22/2011
Link to my wiki: http://intel520.wikispaces.com/
27
Business strategy
Parthasarathy, S. (2010). BUSINESS STRATEGY. Financial Management (14719185), 32-33.
Retrieved from Business Source Elite database.
Name of Analytic Technique
Porter's Five Forces
Purpose
Academic researcher Sritkant Parthasarathy wrote a paper to inform the readers about the
competitive forces in Indian business industry using Porter’s Five Forces analytical
methodology.
Strengths and Weaknesses
The author in his paper did not discuss strengths and weakness of Porter's Five Forces analytical
method.
Description
Academic researcher Sritkant Parthasarathy used Porter's Five Forces method to look at
competitive market forces present in the Indian business industry
Uses
This paper demonstrates that Porter's Five Forces analytical method can be used to analyze the
market forces influencing the Indian business industry.
Comparison
Current article (Parthasarathy, S. (2010). BUSINESS STRATEGY. Financial Management
(14719185), 32-33. Retrieved from Business Source Elite database) is different from the study
performed by strategic researchers Wei-Ming and Kang-Wei (Wei-Ming, O., & Kang-Wei, C.
(2007). Academic researcher Srikant Parthasarathy is performing a country analysis of India.
Whereas Wei-Ming and Kang-Wei are performing a professional services sector analysis in
Taiwan.
Sources Cited
The academic researcher has not provided any sources for his article. The academic researcher
Sritkant Parthasarathy has published original work in a peer reviewed journal financial
management. I evaluated the author's source reliability and high validity (39.5) based on the Dax
Norman's trust evaluation scale.
Most Informative
Some of the informative takeaways from this article were as given below:
 State protectionism and lack of infrastructure could be barriers to entry into an industry.
28



Suppliers in developing countries could pressure on the incumbents by providing low
quality products, which are delivered very fast. Opposed to developed countries where
suppliers are all producing high quality products.
Buyers are fixated more on price than quality in developing countries.
Competition amongst competitors is virtual than real in developing countries. Incumbents
have a strangle hold on the market and are almost impossible to remove. Competition is
also tiered and is most intense at the lowest levels, and there is almost an absence of
competition at the top.
Source Author
Academic researcher Sritkant Parthasarathy is head of Chakra Consulting and visiting professor
of strategy at Christ University.
Source Reliability
The source rated to have high credibility according to Dax Norman trust scale. Trust scale = 39.5
Critique Author
Fuad Khan
fuadkhan@yahoo.com
Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
01/29/2011
Link to my wiki: http://intel520.wikispaces.com/
29
Opportunities and Risks during the Introduction of Fuel Cell Cars
Carle, G., Axhausen, K. W., Wokaun, A., & Keller, P. (2005). Opportunities and Risks during
the Introduction of Fuel Cell Cars. Transport Reviews, 25(6), 739-760.
Name of Analytic Technique
Porter's Five Forces
Purpose
Academic researchers Gian, K.W, Alexander and Peter wrote a paper to inform the readers about
the competitive forces in the fuel cell industry using Porter's Five Forces analytical model.
Strengths and Weaknesses
Academic researchers Gian, K.W, Alexander and Peter did not discuss strengths and weaknesses
of Porter's Five Forces analytical method.
Description
Academic researchers Gian, K.W, Alexander and Peter used Porter's Five Forces analytical
method to look at market direction and competitive market forces present in the fuel cell
industry. At the time, this paper was written it was impossible to perform a complete and precise
competition analysis for fuel cell technology because fuel cells were not available as an assembly
line product for the vehicle market.
Uses
This paper demonstrates that Porter's Five Forces analytical method can be used to analyze the
direction and competitive market forces influencing the fuel cell industry.
Comparison
Academic researchers Gian, K.W, Alexander and Peter used Porter's Five Forces analytical
method to find market direction and competitive market forces of a non-commercially available
product the fuel cell . This is different from the Yeo, J., & Huang, W. (2003). (Mobile ECommerce Outlook. International Journal of Information Technology & Decision Making, 2(2),
313. Retrieved from Academic Search Complete database.) Paper where Porter's Five Forces is
used to find the competitive forces of an existing E-commerce market place.
Most Informative
I found the following points most informative in the article.
 Porter's Five Forces analytical method was modified for the fuel cell industry by adding
three additional forces, infrastructure and fuel, government policy and investments. The
fuel cell industry requires a new fuel i.e. hydrogen and fuel distribution network different
from the existing gasoline distribution network. Clear government policies are needed for
successful market penetration of fuel cell technology. Lastly considerable financial
investment is needed for the adoption of this early phase of R&D
30



Fuel cell is unproven technology hence it has strong competition from substitute
technology like natural gas, gasoline and gasoline-electric hybrid technologies.
Market penetration of fuel cell technology is heavily dependent on government incentives
and subsidies. This means new technologies, which do not have government backing,
might have a very tough time penetration a market with deeply entrenched incumbents
like the U.S. oil industry.
It will be a new paradigm where auto manufacturers are the suppliers of both the vehicle
and the fuel. Unlike the existing paradigm where the auto manufacturers are only
manufacturing the vehicle and the oil is which is essential for the vehicle is supplied by a
powerful supplier.
Source Author
Academic researchers Gian, K.W, Alexander and Peter have performed detailed research on the
fuel cell industry. Gian and K.W Alexander work for Institute for Transport Planning and
Systems (IVT) is part of the Swiss Federal Institute of Technology (ETHZ) in Zurich
Switzerland. Moreover, Peter works for Paul Scherrer Institute, PSI, is the largest research center
for natural and engineering sciences within Switzerland.
Source Reliability
The source rated to have high credibility according to Dax Norman trust scale.
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Cells Bulletin, 9, p. 6.
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Critique Author
Fuad Khan
fuadkhan@yahoo.com
Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
02/04/2011
Link to my wiki: http://intel520.wikispaces.com/
36
A Manager's Guide for Evaluating Competitive Analysis Techniques
Prescott, J. E., & Grant, J. H. (1988). A Manager's Guide for Evaluating Competitive Analysis
Techniques. Interfaces, 18(3), 10-22. Retrieved from EBSCOhost.
Name of Analytic Technique
Porter's Five Forces
Purpose
The purpose of the paper is to inform busy analysts about strengths and weaknesses of 21
competitive analytical Porter’s Five Forces analytical techniques along a set of 11 dimensions.
Strengths and Weaknesses of Porter's Five Forces
Strengths:
1. Structured approach to examining industries
2. Identifies competitors
3. Basis for other in-depth analysis
Weaknesses:
1. Basic assumption that economic structure of the industry is the root of competition
2. Helps drawing industry boundaries.
3. Long time needed to execute this analytical technique. Execute phase involves collection of
data, analysis and dissemination of the findings to the appropriate individuals.
4. Cost to implement Porter's Five Forces analytical method is starting from $10,000 to $50,000,
which is expensive for small companies
Description of Porter's Five Forces Analytical Method
Academic researchers John E. Prescott and John H. Grant present systematically how to
use Porter's Five Forces Analytical method.





Time to implement Porter's Five Forces analytical method can be divided into two states.
Development i.e. specifying objectives of what we want to measure and any other
constraints. Secondly execution phase which involves collection of data, analysis of data
and dissemination of data.
Data collection for Porter's Five Forces analytical method is performed using one or all
three methods i.e. case study, personal interviews and literature search.
Data for Porter' Five Forces is off the shelf, but needs further analysis by analysts to
make sense of the data. Data for Porter's Five Forces is used to address current and future
needs.
Accuracy of Porter's Five Forces is dependent upon the technical, interpersonal
conceptual, diagnostic and analytic skills of the analyst.
Analyst will have to frequently update and challenge new data in the Porter's Five Forces
model as competitive forces change in the industry.
37
Uses
Porter's Five Forces analytical method is a structured approach to examining competitive forces
in industries, identifying competitors in a particular industry. The method can be used as basis
for more in-depth analysis by the strategy analyst. Data collection for the Porter's Five Forces is
performed via research, personal interviews and case study. It takes a long time to execute
Porter's Five Forces analytical method.
Comparison
Prescott and Grant’s paper (Prescott, J. E., & Grant, J. H. (1988). A Manager's Guide for
Evaluating Competitive Analysis Techniques. Interfaces, 18(3), 10-22. Retrieved from
EBSCOhost.) Provides a comparison of Porter's Five Forces against 20 analytical techniques.
Prescott and Grant's paper provides a measurement of Porter's Five Forces analytical techniques,
whereas Carle, Axhausen, Wokaum's (Carle, G., Axhausen, K. W., Wokaun, A., & Keller, P.
(2005). Opportunities and Risks during the Introduction of Fuel Cell Cars. Transport Reviews,
25(6), 739-760) paper depicts how Porter's Five Forces is used to research the competitive
market forces in fuel cell industry.
Most Informative
The following two items in this paper were most informative.
 Sources of data for implementing Porter's Five Forces analytical method is via case
study, personal interviews and literature search.
 Time taken for data collection, analysis and dissemination of information.
Source Author
Academic researchers John E. Prescott and John H. Grant are affiliated with Joseph M.Katz
Graduate School of business University of Pittsburg. Both the academic researchers have
published this paper in a peer reviewed journal Strategic management. The paper was also
refereed.
Source Reliability
The source is rated to have high credibility according to Dax Norman trust scale.
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40
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Critique Author
Fuad Khan
fuadkhan@yahoo.com
Mercyhurst College
Erie PA
Advanced Analytic Techniques Course
01/22/2011
Link to my wiki: http://intel520.wikispaces.com/
41
Annex 2: Analytic Question Data
Analytic Question: Is company TNISO in a position to win contracts for Open Source Intelligence
services focusing on the Middle East and South East Asia with U.S. Central Command?
Data
Bargaining power of
Data Date (when it
Source Name
Estimated Reliability of
Other
happened)
or Location
Data/Source
Comments
01/12/2010
http://www.acq.o
High Credibility
This source
the buyer, i.e. U.S.
sd.mil/dpap/pdi/
provides
CENTCOM is very
eb/index.html
contractual
high. Buyer has
requirements
strict laws for every
of U.S.
facet of the buying
CENTCOM
process.
contracts.
Website is
used to
research U.S.
CENTCOM
buyer
influence.
Threat of substitute
04/11/2010
https://www.fbo.
High Credibility
This source
services is low as
gov/index?s=ag
provides a
only qualified
ency&mode=for
single point-of-
companies with
m&id=471ffe0b2
entry for U.S.
strict guidelines can
854cc0ffba7b5ef
government
provide analytical
f3df3916&tab=n
procurement
support to the buyer
otices&tabmode
opportunities
i.e. U.S. CENTCOM
=list&subtab=list
over $25,000.
&subtabmode=li
Registered
st&pp=30
companies
can research if
U.S.
CENTCOM is
procuring
substitute
services.
Rivalry amongst
existing competitors
04/13/2010
www.4centurion.
com
High Credibility
This source
provides key
is high. There are
competitor
few incumbent
intelligence for
competitors like
U.S.
Booz Allen,
CENTCOM
42
SAIC,CSC, SRA
market place.
providing analytical
support to U.S.
CENTCOM
Threat of new
05/4/2010
entrants is high.
www.epipeline.c
High Credibility
om
This source
provides
Firms providing
unique market
analytical support to
intelligence to
U.S. CENTCOM do
identify new
not need large
entrants in the
amount of capital or
U.S.
market influence to
CENTCOM
provide analytical
market space.
support to U.S.
CENTCOM and
become a new
entrant in the
market place.
Bargaining power of
04/01/2010
http://www.intelli
Medium Credibility
This source
suppliers is low.
gencecareers.co
provides
Companies are
m/
research
able attract
information for
qualified
recruitment
intelligence
trends of
analysts from the
intelligence
labor market.
analysts in
U.S.
CENTCOM
market place.
Estimated reliability has been calculated by using Dax Norman trust scale located at
http://daxrnorman.googlepages.com/WebSitesYouCanTrust-Oct08.pdf © Dax R. Norman, 2001.
Unlimited personal or education use authorized with this statement. The scale for Dax Norman
trust scale is shown below;
46.75= Very High Credibility
40.00= High Credibility
35.06= Medium Credibility
21.00= Low Credibility
7.46= Not Credible
43