| Although Porter's five forces theory is a very | | | | existing competitors; impact of suppliers and impact of |
| effective and well-defined theory, it has its weak | | | | buyers. His examination of the industry profitability and |
| points. Porter's theory is a one-sided one based on the | | | | competitive forces is a valuable contribution to the |
| events which took place in 1980s. It is necessary to | | | | market examination. The Five Forces of Competition |
| point out that Porter's theory does not include such | | | | framework by Porter stays one of the most popular |
| important parts of market competition as innovation, | | | | tools of industrial analysis. Porter's five forces model |
| benchmarking, brand popularity, innovation circle and | | | | has contributed to the study of competition as it |
| development of technology. Brand popularity and | | | | suggests that rivalry is only one of several forces that |
| strategic planning are the core components of a | | | | determine industry's attractiveness with its high rate in |
| successful business along with the innovation | | | | the industries with the possibility of substitute products |
| strategies. Let us analyze the importance of innovation, | | | | introduction. Nevertheless, these five forces are not |
| brand popularity and strategic planning in order to | | | | the only ones that define the way companies |
| determine its necessity for being included in the | | | | compete in an industry. It should be pointed out that the |
| competition analysis. | | | | whole structure of the industry plays a significant role. |
| There is a constant interest in the study of the forces | | | | However, Porter's five forces theory has its weak |
| that impact a company via the usage of competitive | | | | points along with strong ones. Porter's theory does not |
| advantage. Porter is a recognized leader in competitive | | | | include such important parts of competition as |
| analysis elaboration, who has elaborated five forces | | | | innovation, benchmarking, brand popularity, innovation |
| theory, which states that competitive advantage | | | | circle and development of technology. Porter's theory |
| comes from the ability to gain profit via investment in | | | | has been elaborated for a product of his time, when |
| an industry sector with higher than the average return. | | | | there was a relatively stable environment. Five forces |
| He is the author of main models on determination of | | | | theory does not point out what competitors are |
| main competitive forces and variants of competitive | | | | described - actual or potential and what substituted are |
| strategies. Porter believes that the market share, the | | | | meant - internal or external. Porter's five forces theory |
| profit level of a company depends on how well it can | | | | does not have a very clear taxonomy. Moreover, his |
| react to effective competitive forces: new competitors | | | | theory does not make much emphasis on technology |
| with similar products; threat of substitute products; | | | | and innovation, which are very important nowadays. |