The micro competitive forces
Whilst Porter does give some narrative help for assessing the five forces, this is not presented in the very powerfully distilled and visual format of his original model. For example, for competitive rivalry, Porter asks us to think
about things like the relative concentration of rivals, such as how many are in the market- place and with what mass, together with the number of different strategic groups of similar competitors. By extracting from Porter’s text and by observation of the main considerations which managers actually make, a pilot frame- work can be developed to move the five forces down to another level. Additionally, Porter merely lists these considerations and managers appear often inclined to consider them as ‘addi- tive’. However, the next set of figures show how the effects may be ‘additional’ amplified by each set of micro forces. Each one of the five forces may therefore have some sub-ingre- dients, which are worthwhile exploring. The following models are potentially viable frame- works put forward for further experimentation and research to test their resilience and to learn from their application more generally. A particularly interesting application would be to use these to explore how the five forces work at a micro level even for individual busi- ness transactions. Figures 9–13 can be used either literally to think through each force visu- ally, or as a convenient way of thinking of their underlying drivers.
Taking the bargaining power of buyers (Figure 9) first, this appears to be a function of:
� Importance — in terms of value added. � Urgency — in terms of lead times to con-
sumption. � Discretion and emotion.
Copyright © 2006 John Wiley & Sons, Ltd. Strategic Change, August 2006 DOI: 10.1002/jsc
SUPPLIER POWER
BARGAINING POWER OF BUYERS
SUBSTITUTES
ENTRY BARRIERS
RIVALRY
Figure 8. Porter’s five competitive forces: entry barriers.
EMOTION BARGAINING POWER OF BUYERS
DISCRETION
IMPORTANCE
URGENCY