4 Problems with Michael Porter’s Five Forces (Jeff’s Asia Tech Class – Podcast 63)

 

This week’s podcast is on the well-known Five Forces framework by Michael Porter. I go through some of its limitations and where I think it works best.

You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.

Michael Porter’s five forces:

  1. Bargaining power of suppliers
  2. Bargaining power of buyers
  3. Threat of Substitutes
  4. Barriers to entry / threat of potential entrants
  5. Degree of existing competitive rivalry
  6. Role of complements?

My 4 problems with this are:

  1. It doesn’t work for dynamic and non-classical strategy terrains.
  2. It doesn’t work for platforms and ecosystems.
  3. It doesn’t work with SMILE marathon dimensions, particularly innovation.
  4. The addition of complements doesn’t really cover the emergence of a connected, digital world.

I also cited the 4 terrains from BCG:

Related podcasts and articles are:

From the Concept Library, concepts for this article are:

  • 5 Forces
  • Innovation
  • 4 Terrains and Strategies (BCG): Predictable vs. Malleable
  • SMILE Marathon

From the Company Library, companies for this article are:

  • None
This is part of Learning Goals: Level 7, with a focus on:
  • 37: Five Forces

Photo by Mahir Uysal on Unsplash

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I write, speak and consult about digital strategy and transformation.

My book Moats and Marathons details how to measure competitive advantage in digital businesses.

I also host Tech Strategy, a podcast and subscription newsletter on the strategies of the best digital companies in the US, China and Asia.

This content (articles, podcasts, website info) is not investment, legal or tax advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. This is not investment advice. Investing is risky. Do your own research.

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