Question

1. Discuss three limitations that should be kept in mind when conducting a Porter model analysis. Which limitation of the model do you think is of most concern? Why?

Answer 1

The limitation of Porters’ model is to assume the conditions for the perfect market and assuming static market structure. Likewise, no consideration is given in case if there is any strategic alliances, how the information system are aligned in the organization. Porter Model considers completion among organizations in order to accomplish competitive advantage among suppliers and customers in the market. Porter model can offer information by considering an industry as a whole rather offering information on single organization. Porter Model is unable to group organization based on the same business lines as it is difficult for organization to be successful in different business sectors. It is difficult to pay attention to all the five forces of the Porter’s model. Sometimes one force work for one industry may or may not work for other. Thus, Porter model helps in getting back to the immediate business plan but unable to help in long term planning as many factors changes over the period of time, e.g. quality, cost, what could be the best substitute, etc.