Abstract
Michael Porter’s five forces framework builds on the contribution of industrial organizational economics and is a relatively comprehensive tool for assessing the attractiveness of an industry in strategic management. We trace the origins of the framework, portray the components in the framework, briefly review the empirical works and examine its utility. Finally, we review some of the factors that limit the generalizability of the framework.
Michael Porter’s five forces framework portrays industry structure and explains its profitability. Industry structure analysis has implications for incumbents in an industry as well as for firms considering entry into the industry. Incumbents may develop effective strategies to deal with the threats from the different forces, while the profitability potential influences an entrant’s decision to enter the industry. This contribution discusses the origins and the elements of the framework and pinpoints its key limitations.
This entry was originally published on Palgrave Connect under ISBN 978-1-137-49190-9. The content has not been changed.
Similar content being viewed by others
References
Andrews, K.R. 1971. The concept of corporate strategy. New York: Dow Jones-Irwin.
Bain, J.S. 1968. Industrial organization, 2nd ed. New York: Wiley.
Bower, J.L., and C.M. Christensen. 1995. Disruptive technologies: Catching the wave. Harvard Business Review 73: 43–53.
Brandenburger, A.M., and B.J. Nalebuff. 1997. Co-opetition: A revolutionary mindset that combines competition and cooperation: The game theory strategy that’s changing the game of business. New York: Currency.
Dunning, J.H. 1993. Internationalizing Porter’s diamond. Management International Review 33: 7–15.
Greve, H.R. 1998. Managerial cognition and the mimetic adoption of market positions: What you see is what you do. Strategic Management Journal 19: 967–988.
Hagiu, A. 2006. Microsoft Xbox: Changing the game? HBS case, No. 9-707-501.
Hunt, M.S. 1972. Competition in the major house appliance industry 1960–1970. Unpublished doctoral dissertation, Harvard University.
Ketchen, D.J., C.C. Snow, and V.L. Hoover. 2004. Research on competitive dynamics: Recent accomplishments and future challenges. Journal of Management 30: 779–804.
Lee, J. 2003. Innovation and strategic divergence: An empirical study of the US pharmaceutical industry from 1920 to 1960. Management Science 49: 143–159.
McGahan, A.M., and M.E. Porter. 1997. How much does industry matter, really? Strategic Management Journal 18: 15–30.
Mason, E.S. 1939. Price and production policies of large-scale enterprises. American Economic Review 29: 61–74.
Narayanan, V.K., and L. Fahey. 2005. The relevance of the institutional underpinnings of Porter’s five forces framework to emerging economies: An epistemological analysis. Journal of Management Studies 42: 207–223.
Nath, D., and T.S. Gruca. 1997. Convergence across alternative methods for forming strategic groups. Strategic Management Journal 18: 745–760.
Osborne, J.D., C.I. Stubbart, and A. Ramaprasad. 2001. Strategic groups and competitive enactment: A study of dynamic relationships between mental models and performance. Strategic Management Journal 22: 435–454.
Porter, M.E. 1980. Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.
Porter, M.E. 1981. The contributions of industrial organization to strategic management. Academy of Management Review 6: 609–620.
Porter, M.E. 1983. Cases in competitive strategy. New York: Free Press.
Porter, M.E. 2008. The five competitive forces that shape strategy. Harvard Business Review 86: 78–95.
Rumelt, R.P. 1991. How much does industry matter? Strategic Management Journal 12: 167–185.
Stimpert, J.L., and I.M. Duhaime. 1997. Seeing the big picture: The influence of industry, diversification, and business strategy on performance. Academy of Management Journal 40: 560–583.
Teece, D.J. 1986. Profiting from technological innovation: Implications for integration, licensing and public policy. Research Policy 15: 285–305.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Copyright information
© 2016 The Author(s)
About this entry
Cite this entry
Baburaj, Y., Narayanan, V.K. (2016). Five Forces Framework. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_632-1
Download citation
DOI: https://doi.org/10.1057/978-1-349-94848-2_632-1
Received:
Accepted:
Published:
Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-94848-2
eBook Packages: Springer Reference Business and ManagementReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences