Question

Analyzing the potential Market-space by using Porter’s Five Forces Analysis is critical to ensure successful decisions. There are a multitude of General Environmental factors and forces that impact the business decision to enter or not enter target market. Even after entry, businesses must remain vigilant about their external environment. Based on your experiences and understanding, what external force(s) have impacted a company you know in a positive or negative manner?

minimum 300 words

Answer 1

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. It is a business analysis model that helps to explain why various industries are able to sustain different levels of profitability. Porter's five forces are:

1. Power of suppliers
2. Power of customers
3. Competition in the Industry
4. Threat of substitute products
5. Potential of new entrants into the Industry.

Porter analysis is very important and can lead to a successful business decisions. However it is not the only analysis to be done by the business. A business must have a swot analysis done before and even after entering into a new market. It is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning. A SWOT analysis is an incredibly simple, yet powerful tool to help you develop your business strategy, whether you’re building a startup or guiding an existing company.

Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location. Opportunities and threats are external—things that are going on outside your company, in the larger market. You can take advantage of opportunities and protect against threats, but you can’t change them. Examples include competitors, prices of raw materials, and customer shopping trends.

Also, the other most important external factors that help in successful business decisions are social, legal, economical, political and environmental factors.

A real life example could be the Maggi ban in India. During 2015 it was alleged that the contents of maggi are toxic for human consumption and various commission/organisation/mob protests advocated for it's complete ban in india. It said that Maggi contains more than consumable amount of MSG and lead which can harm the human body. Maggi However denied such allegations, even though it announced to reduce those elements in preparation but still it lost around 80% of the Market as it failed to realise the social and legal factors involved in the case.

Also, there are a lot of companies that did good in one market or the other, in one country or the other and not in the other countries or markets as they fail to judge the other environmental factors present and take wrong decisions based on that.