Business Analysis and Industry Forces

The SWOT analysis, along with PESTEL factors, told you a good deal about the internal and external threats on your business operations. Porter's Five Forces analysis helps you to understand the industry and the factors that determine your power or position in the market.

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Using the Analysis to Develop Choose or Develop a Strategy

The above analyses should provide sufficient information to choose or develop a strategy that meets with your business's ability and improves your position in the market. In any event, you will want to choose a strategy that:

• Is within your business current or potential strengths,
• Minimizes or avoids your business identified weaknesses,
• Works to capitalize upon identified market opportunities, and
• Avoids the identified internal and external threats associated with a strategic position.

In order to employ this information in choosing a strategy, there are certain assumptions one must recognize about a business and industry. The underlying drivers of profit are the same across businesses and industries. And, Competition within any industry is the primary factor in determining profitability in an established or emerging market. Remember for a strategy to be effective it should do any or all of the following:

• Reduce supplier power,
• Reduce consumer power,
• Avoid or reduce the threat of substitutions,
• Raise the barriers for new entry,
• And out maneuver market competitors.