Question

Porter's Five Forces framework has been around since the 1980's and has been very effective in evaluating industry attractiveness. Changes in the dynamic nature of industries has not impacted the usefulness of the tool. The tool has no limitations. Group of answer choices

Answer 1

Answer:

False

Explanation:

Porter's Five Forces framework is a list of factors which provide an explanation to the forces affecting competition in industries. These five forces include;

1. Competition in the industry

2. Potential of new entrants into the industry

3. Power of suppliers

4. Power of customers

5. Threat of substitute products

Over the years, these five forces have been used in explaining the structure of certain industries. The framework however has limitations, some of which include,

1. It is not in terms with current realities, such as new advancements in technology which were not available as at the time the framework was formed.

2.  Some companies operate different structures, whereas, the framework classifies each industry under one structure.

3. There is the possibility of industries to give equal consideration to all five factors, whereas in reality only some of the factors might be applicable to them.

4. Individual companies instead of industries now use the framework to make their business analysis which is not the real reason for the development of the framework. It was meant for industries as a whole.