The Five Competitive Forces That Shape Strategy

The Five Competitive Forces that Shape Strategy
(Porter M. E., 2008)

Since a young economist, Michael E. Porter wrote his first article “How Competitive Forces Shape Strategy” in Harvard Business Review in 1979, his theory called ‘Five Forces Model’ has become the Bible in the strategy field. Also, his model is one of the most widely used external environment analysis framework in real business world. This article “The Five Competitive Forces that Shape Strategy” published in 2008 can be well appreciated for upgrading his previous theory in full by adding new practices and theories considering changes of the industrial structure.

However, he still seems to focus only on the “Sustainable Competitive Advantage”. This article presents an analysis of the competition structure in the industry and what strategies are needed in order to secure sustainable competitive advantage over its competitors. As a result, the real business world has been obsessive with the notion that has to create a sustainable competitive advantage for too long.

Today's business environment is more connected than ever, and industry boundaries are collapsing. In the past, it was possible to know who was my competitors clearly, predict which strategy they would build and implement my strategies against competitor’s. On the contrary, it becomes vague to identify who is my competitor in my industry nowadays. In the competitive environment where competitive advantages can be disappeared within less than 1 year, companies cannot afford to spend such a long time to make a long-term strategy for securing the sustainable competitive advantages.

Of course it would have been perfect if companies can secure the sustainable competitive advantages, but it is counter-productive as compared to inputting resources. Provided that the sustainable competitive advantage is so difficult to secure in the current business environment, it can be more effective that the company continues to stay at the forefront by constantly creating short-term and temporary competitive advantages rather than sustainable competitive advantages.

Fujifilm is a good example. Fujifilm detected the fundamentals change of the film industry (digital camera etc.), unlike competitors such as Kodak in the 1980s. Since then, Fujifilm has been constantly pioneering healthcare, office automation, LCD, optical equipment sector with its core competencies accumulated by digital technology and film production. Fujifilm has succeeded in continuing reorganization into new business areas.