The idea of Porter’s Five Forces Model is important to the field of marketing and held in high regard by many marketers. However after discussing this in class I believe this model doesn’t take into account the impact of global convergence and web 2.0 technologies (Ness G, 2008). Michael Porter’s article, originally published in 1979, seems disconnected with modern day multi-channel business strategies, failing to take into account the monumental effect the internet has on businesses. The internet, with a global audience, has radically expanded and accelerated the market environment making it much more competitive and dynamic than in 1979. A failure to recognise that the application of Porters theory no longer accurately reflects today’s international, multi-channel markets, could have adverse consequences.
As Professor Michael E. Porter (2008, 0:50 3:30) points out, the five forces are useful as “competition is often looked at too narrowly by managers” and that “the underlying structure is what drives profitability”. While Porter’s Five Forces may not fully lend themselves to multi-channel businesses, it is still a pertinent aid to assist marketers and leadership teams to understand the strategic environment they operate within. However, it is also important that they consider the significant effect technology and the internet has on this model. The use of dedicated ultra high speed fibre- optic cable has been used in conjunction with software to allow stockbrokers to gain millisecond advantages in internet connection speeds. It has been estimated that a one millisecond speed advantage over rival financial houses could increase a brokers profits by $100 million a year (Martin R, 2007). Consequently, while Porters Five Forces is still relevant, marketers should always keep an eye on the internet where new technologies and competition can change the dynamics of the marketplace making business who fail to adapt irrelevant within a very short space of time.
You must be logged in to post a comment.