Growth drivers: dot.com market for shares, 2000.
inhospitable, this will clearly dampen the growth drivers, and if the growth drivers within a particular market are themselves tightening, for example due to life-cycle effects, then this will put a disproportionate and adverse pressure on Porter’s five forces, particularly in the bargaining power of buyers, and also upon rivalry. Furthermore, a high- growth environment may encourage entrants and a low one will discourage these.The result can lead to a collapse in confidence and in prices unless there are lots of exits, for example, in the health club market in the UK in 2002–3, as will be seen later.
Indeed, it may be helpful not to call it ‘Porter’s five forces model’, particularly when introducing it to a team or wider organization. An alternative is to call it ‘competitive pres- sures’, which is less jargon-laden but includes the five forces more as a checklist. This rela- belling of the model has many attractions, especially as it may seem strange and foreign to everyday management discourse. This may mean that ‘early adopters’ will feel self-con- scious using it with their colleagues. As prob- ably most intellectual contact with the technique is typically via a management text, an MBA or on a public strategy programme rather than on an in-company event, individ-
ual managers may feel reluctant to use it with their more novice peers. Besides these exter- nal interdependencies, Porter’s five competi- tive forces are themselves highly interdependent with each other — again something only implicit in Porter’s and other texts. Figure 4 now plots their main interde- pendencies.
Porter’s five competitive forces are therefore both highly interdependent with the other subsystems in the external environment, rather than being relatively stand-alone. This figure plots the interdependencies internal to the five competitive forces:
Porter’s five competitive forces are highly interdependent
� Between ‘bargaining power of buyers’ and ‘entry barriers’: buyers may actively en- courage new entrants, thus reducing entry barriers.
� Between ‘bargaining power of buyers’ and ‘substitutes’: buyers may actively search for
Porter’s five forces model 217
Copyright © 2006 John Wiley & Sons, Ltd. Strategic Change, August 2006 DOI: 10.1002/jsc
Political factors
Economic factors
INDUSTRY LIFE
CYCLE
Technological factors
Social factors
GROWTH
COMPETITIVE
DRIVERS
PRESSURE
Customers
Company & Competitors
– Some Generic Systems
Figure 3. The ‘competitive climate’.