COMPUTER APPLICATIONS

COMPUTER APPLICATIONS & SYSTEMS PROJECT

COMPUTER APPLICATIONS & SYSTEMS PROJECT

Porter's Five Forces model

Porter's five forces theory is based on factors outside an industry that influence the nature of competition within it and on factors inside the industry that influence the way in which companies compete. The researcher has conducted an examination of the industry profitability and competitive forces. This investigation is regarded as a valuable contribution to the market examination. However, Porter's five forces model does not take into consideration technology and innovation. The research refers mainly to the situation that existed in 1980s and should be used with reserve to the above mentioned factors.

This article is aimed at examining the current situation of the market and Porter's theory relevance to the present day property businesses. The article defines and evaluates Porter's five forces model in terms of its being up to date for property businesses. A company has to understand the dynamics of its industries in order to be competitive in a market. Porter's five forces theory that is based on the intensity of competition and the determination of relative strengths of these forces is a helpful guide towards this aim.

In the classical resource-based view of the world, competitive advantage exists when a firm is able to sustain profits that exceed the average of the industry. The goal of much of business strategy is to achieve a sustainable competitive advantage. Michael Porter identified two basic types of competitive advantage: Cost advantage and differentiation advantage. A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage).

Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. According to Porter, every industry is under the influence of five forces(Lundeberg et al, 2005 ). A business manager trying to gain competitive advantage over rival firms can use the five forces model to better understand the industry context in which his firm operates.

The five forces are defined as:

o Rivalry among existing firms striving for competitive advantage over each other

o The bargaining power of suppliers, especially related to their ability to influence a firms competitive position through the power they hold over cost or availability of inputs a firm needs

o The bargaining power of buyers, especially related to their ability to influence a firms existence due to their ability to switch to rival firms or to substitutes

o Threat of new entrants that are able to overcome barriers to entry into the market creating potentially powerful new rivals to the firm

o Threat of substitutes as defined by the availability of alternative products or services outside the industry that can satisfy a firms' customers' needs(Davenport, 2006).

Land Securities Business Highlights in 2006/7

Land Securities total property return on the investment portfolio was 16.2% and our return on capital employed for Land Securities Trillium on assets held over the full year was ...