Porter 5 Forces - Analysis

Created by Michael Porter, the Porter's 5 Forces is a simple yet powerful tool that models an industry being influenced by five forces which aids in the understanding of where power lies in a business situation. This allows a strategic business manager to take advantage of a situation by using his strengths to create opportunities as well as to know his weaknesses in order to blunt potential threats, avoiding the sticky situation of making a wrong move. Typically used to identify whether new businesses or products have the potential to be profitable, it can also be used to understand the balance of power in order for businesses to re-strategize. Let's take a quick look @ the following video for a brief understanding of the model.

1.) Competitive Rivalry

In a market with perfect competition, profits are driven to zero. However in most instances, competition is far from perfect and firms are not unsophisticated passive price takers. The degree of rivalry can be measured by indicators of industry concentration. High concentration indicates a large proportion of the market share is held by the largest firms, while low concentration translates into a market teeming with many rival firms, none of which holds a significant market share. The degree of rivalry is often influenced by the following characteristics:

- larger number of firms

- slow market growth

- high fixed cost

- highly perishable products

- low levels of product differentiation

- high exit barriers

2.) Threat of Substitution

A product's demand is often closely related to the price change of a substitute (or similar) product. The more substitutes are available, the customers will have more alternatives, subsequently it weakens your power to manipulate the price freely. Take note that substitutes may not necessarily be rival products, for example plastic containers versus glass containers.

3.) Buyer Power

This refers to the consumers' ability to dictate prices, the stronger the buying power, the easier it is for consumer's to dictate prices. Buyers are typically strong when: they are concentrated and/or purchase a significant proportion of the output. And they are weak when: they are fragmented and/or when there is significant buyer switching cost.

4.) Supplier Power

Typically, the fewer supplier choices there are, the more we'll need to rely on them, and the more powerful they are. Suppliers are strong when: suppliers are concentrated and there is significant cost incurred when switching suppliers. They are weak if: there are many competitive suppliers, customers are weak (no power to dictate price) and concentrated buyers.

5.) Barriers to Entry

These are characteristics industries possess to protect their profit levels and prevent new rivals from entering the market as that will corrode their profit margins. There are a few ways in which barriers to entry are created: government creates barriers to regulate industry, patent knowledge serves as restriction for entry into an industry and economies of scale.

Battle of the Browsers - IE vs Firefox vs Safari vs Chrome

Providing the vehicle to navigate the web, web browsers are indispensable to our internet experience. With the decline of Netscape, one would not be blamed for thinking that it was the end of the browser wars, and it didn't in fact. With internet browsers being the most important piece of computer software used on daily basis, it didn't take long for new browsers to stake their claim on the market. As the battle heats up, traditional leader microsoft's IE looked to be the biggest loser, but it could get worse if not for the fact that many netizens already had a web browser installed and couldn't care to change it. For those who're keen to see what the various browsers have to offer, let's take a quick look at some of the big players.

Internet Explorer 8

Having triumphed in its mighty battle against Netscape, IE has maintained a commanding market share over the years, but it's all about to change with plenty of new players entering the market. Features include: "favourites" bar for one-click access, "accelerators" to facilitate quick search and being available in 25(!) languages.

Pros -> compatibility view helps see older websites easier, handy time-saving tools

Cons -> security loopholes, being the market leader made it more susceptible to attacks, faster than previous editions of IE BUT still agonizingly slow compared to other browsers

Mozilla Firefox 3.5

A serious challenger to IE, Mozilla's Firefox has consistently emerged as runner-up in the web browser wars. Fast gaining in popularity, it offers new features like "tear off tabs" to drag/drop tabs into separate browser windows, private browsing option and the cool "location-aware browsing" to serve you better.

Pros -> roughly 3x faster than its predecessor, passionate development community

Cons -> patching required for some bugs and security issues, crash potential

Apple Safari 4

The browser of choice for Apple computer users, the elegant looking Safari has won over many Windows users too. A speedy web browser with smooth and reliable performance, its attractive "cover-flow"-like horizontal image gliding has resemblance to iTunes feature and make website browsing a pleasing visual experience.

Pros -> quick & reliable with minimal fuss

Cons -> not all plug-ins supported, limited functionality of the mouse

Google Chrome

The newest player in the competitive browser market offered by internet giant Google, Chrome packs plenty of speed backed by the world's biggest search engine to make your web surfing experience a lasting (positively) one. Offering "stealth" privacy options for anonymous browsing, its one-click bookmark has proven to be a hit among fans as well.

Pros -> load/surf fast with simple & clean web designs, available in 50(!!!) languages

Cons -> lack of add-ons, limited customization options

Verdict: While Firefox remains the best browser on the whole with its impressive array of features & add-ons, Google's focus on Chrome will take away some of its previous focus on Firefox, thus how long a key player Firefox will stay in the browser wars remain to be seen. Early indications also reflected that Chrome's taking away more of Firefox's userbase than IE's. Despite being the new kid on the block, Chrome has proven its credentials to be the one to look out for in the coming months. With IE holding onto 3/4 of the browsing market due to its default status in Windows machines, it still remains the one to be beaten although it's been under plenty of critics recently, prompting them to get their act together. Primarily geared for Apple computer users, Safari is gathering pace for its assault on the web browser market, but requiring some time to get use to makes it an underdog in the Windows world at the moment.

Internet - More To Connectivity Than Meets The Eye

Internet, often dubbed the information super highway, has become such an integral element of our culture that some believe that it is already a hallmark of human civilization *wow!* Well...Close, but not quite there, yet! We all marvelled at the astonishing rate at which internet infiltrate our lives since its inception, to the extent that we assumed that it is the norm and without which, one is in danger of being left behind by the masses. That's when our ignorance got the better of us!

No wonder they say to assume is to make an ass out of both you and me. Catch the drift? The above statistics was calculated based on a world population of 6, 767, 805, 208 with an estimated 1, 733, 993, 741 internet users (Sept 30, 2009). Seems like there is still an awful lot of potential that can be harnessed, it comes as a surprise that the penetration rate for Asia only tops that of Africa, given that most will be inclined to belive that Asia probably should be right behind North America & Europe. Of course this is not to say that internet access is fairly difficult to get hold of in Asia, it's just that many Asian countries have large sections of their population not 'wired up'. Singapore (of course!), Japan & Hong Kong are a few of the "exceptions" in Asia, having penetration rates of up to 70%.

Putting things into perspective, internet growth has stalled and the explosive growth we've seen in the past decade is replaced by evolution of the composition and utility of the medium. With the increasing influx of younger internet users (due to social networking sites like Facebook, Twitter etc), a lot remains to be seen if we can make their browsing experience safe and secure.

Food for thought >>> Amidst the belief of fading internet boom and the frenzy to develop internet and its relevant uses laterally, one cannot overlook the fact that the world is not as connected as we all thought it is. While we lavish obscene amounts of money on making the internet better (mainly for current users), one can't help but wonder if we should also make this necessity accessible to those who have yet to become part of our cyberworld?