MGT Notes

Reference: Strategic Management (5e) – Frank T. Rothaermel (Pg 83)

Analyzing the five forces in Porter’s model allows firms not only to understand their industry environment but also to shape strategy. If the impact of the forces is strong, the industry has low profit potential and makes it less attractive to enter. The corollary is also true: If the impact of the forces is weak, the industry has greater profit potential and makes it more attractive to enter. The purpose of a good strategy is to position an entity in such a way so as to relax the constraints of strong forces while leverage weak forces.