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T h e o r i e s U s e d i n I S R e s e a r c h
T h e o r y o f C o m p e t i t i v e S t r a t e g y
| Theory Name | Theory of Competitive Strategy |
| Acronym | 5 forces |
| Alternate name(s) | Five-forces model, Competitive forces, Porter's five forces, Porter's framework for competitive analysis |
| Main dependent construct(s)/factor(s) | Above normal profits |
| Main independent construct(s)/factor(s) | Main Constructs: • The bargaining power of customers • The bargaining power of suppliers • The threat of new entrants • The threat of substitute products • The intensity of competitive rivalry |
| Concise description of theory | Michael Porter's 1979 framework uses concepts
developed in micro-economics to derive 5 forces that determine the
attractiveness of a market. They consist of those forces close to a company
that affect its ability to serve its customers and make a profit. A change
in any of the forces requires a company to re-assess its marketplace. Four forces -- the bargaining power of customers, the bargaining power of suppliers, the threat of new entrants, and the threat of substitute products -- combine with other variables to influence a fifth force, the level of competition in an industry. This 5 forces analysis is just one part of the complete Porter strategic system. The other elements are strategic groups (also called strategic sets), the value chain, the generic strategies of cost leadership, differentiation, and focus, and the market positioning strategies of value based, needs based, and access based market positions. Source: http://en.wikipedia.org/wiki/Five_competitive_forces |
| Diagram/schematic of theory |
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| Originating author(s) | Michael E. Porter |
| Seminal articles | Porter, Michael E. 1979. How competitive forces shape strategy. Harvard business review, 57(2): 137-145. |
| Originating area | Economics, Strategic management |
| Level of analysis | Industry, Firm |
| Links to WWW sites describing theory |
http://www.investopedia.com/features/industryhandbook/porter.asp, A
brief description of the theory http://www.quickmba.com/strategy/porter.shtml, Detailed explanation about the model with some examples http://www.mindtools.com/pages/article/newTMC_08.htm, A step to step guide for using the model for new learners |
| Links from this theory to other theories | Resource Based View of the Firm, Knowledge based theory of the firm |
| IS articles that use the theory | Chakravarthy, Bala. 1997. A
new strategy framework for coping with turbulence. Sloan management review,
38(2): 69.
Chen, Jason C., Chong, P. P., & Chen, Ye-Sho. 2001. Decision criteria consolidation: A theoretical foundation of pareto principle to porter's competitive forces. Journal of Organizational Computing & Electronic Commerce, 11(1): 1-14. Chen, Ye-sho, Chong, P. P., & Chen, Jason C. 2000. Small business management: An it-based approach. Journal of Computer Information Systems, 41(2): 40. Kim, K. K., & Michelman, Jeffrey E. 1990. An examination of factors for the strategic use of information systems in the health care industry. MIS Quarterly, 14(2): 201. McFarlan, & Warren, F. 1984. Information technology changes the way you compete. Harvard business review, 62(3): 98. Parsons, G. 1983. Information technology: A new competitive weapon. PHILIP, . 1995. Technology management and information technology strategy - preliminary-results of an empirical-study of Canadian organizations. Porter, Michael E. 2001. Strategy and the internet. Harvard business review, 79(3): 62. Porter, Michael E., & Millar, Victor E. 1985. How information gives you competitive advantage. Harvard business review, 63(4): 149. Rackoff, Nick, Wiseman, Charles, & Ullrich, Walter A. 1985. Information systems for competitive advantage: Implementation of a planning process. MIS Quarterly, 9(4): 285. |
| Contributor(s) | Hamid Akbari |
| Date last updated | October 16, 2005 |
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