Porter models are important as a way to evaluate competitive environment and/or internal processes. Porter’s concepts form a common language business professionals use to talk about strategy Use Porter strategy terminology in discussing how an industry and companies in the industry compete. Three Porter Models: 1) Five forces model 2) Generic Strategies 3) Value Chain

1. Developing strategy
for Internet age
Porter’s three framework model
By
Cherith R.
GCU0117MBAD474

2. Porter’s three frameworks are:
•The five forces model
•The three Generic strategies
•The value chain
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3. Five forces model
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4. Supplier Power
1.The market is conquered by a few big suppliers.
2.There are no alternative products available.
3.The supplier customer base is fragmented, making
their bargaining power low.
4.High switching costs from one to another supplier.
Buyer power
Giving choices to the buyer.
For example: Hotel chains
•Give points.
•Other loyalty programs.
•Cash the points for free hotel stays at one of
their resort hotels.
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Threat of new entrants
Entry barrier – a product or service feature that
customers have come to expect from companies
industry.
Threat will be high when it is easy for competitors
to enter the market.
Threat of substitutes
•Brand dependability of customers.
•Secure customer relationships.
•Switching costs for customers.
•The relative price for performance of
substitutes
•Up-to-date trends.
Competitive rivalry:
If there is intense rivalry in an industry
•Price wars (competitive price reductions),
•Investment in innovation & new products
•Intensive promotion (sales promotion and higher
spending on advertising)

5. Porter’s
Generic
strategies
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7. 1. Cost Leadership
Superior profits through lower costs.
E.g. :- Wal-Mart, McDonalds
2.Differenciation
Creating a product or service that is perceived as
being unique throughout the industry.
Eg: Harley Davidson, Apple
3.Focus
Concentrating on costs, product or service or a
limited part of that is perceived the market.
Eg: Rolex, Lamborghini 7

8. The Value ChainA value chain is a set of activities that an organization
carries out to create value for its customers
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9. Service
The Value chain
Inbound logistics Operations
Outbound
Logistics
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Marketing
&
sales
Firm Infrastructure Human Resource Management
Procurement Technology
P
R
O
F
I
T
Primary activities
Support activities

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11. Thank
you
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