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Today’s Applicability of Porter’s Five Forces Model

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Digital Marketing - Study Notes:

One of the main limitations of Porter’s Five Forces framework is its static nature. The framework helps to understand competition and profitability in a determined industry. However, competition is intrinsically dynamic, and that dynamism is one of the engines for industry structure transformation and evolution. Porter’s Five Forces may fail to take this into account. Changes at the industry level can be seen to happen from several fronts.

Industry convergence

Many industries, especially in high-tech sectors, are converging (Johnson et al., 2017). Convergence is where previously separate industries begin to overlap or merge in terms of activities, technologies, products, and customers. Technological change has brought convergence between the telephone, photographic, and PC industries. For example, mobile phones have become smartphones that include camera and video, emailing, and document editing functions. Hence, companies that were once in separate industries – such as Samsung in mobile phones, Sony in cameras, and Google in online search – are now in the same smartphone industry.

Fourth Industrial Revolution

The Fourth Industrial Revolution, or Industry 4.0, is a term coined by Klaus Schwab (2016), the founder and executive chairman of the World Economic Forum. Technology has always changed industries and societies. However, there are essentially three things that make the next stage of technological change qualify as a ‘revolution’ – velocity, breadth and depth, and systems impact. The Fourth Industrial Revolution is not just about smart and connected machines and systems: its scope is much wider.

Occurring simultaneously are waves of further breakthroughs in areas ranging from gene sequencing to nanotechnology, renewables to quantum computing. It is the fusion of these technologies — and their interaction across the physical, digital, and biological domains — that makes this revolution fundamentally different from its predecessors.

Industry 4.0 brings together an unprecedented level of harmonization and integration of many different disciplines and discoveries. Today, for example, digital fabrication technologies such as 3D printing, laser cutting, and robotic manipulation can interact with the biological world. Some designers and architects are already mixing computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer systems that involve the interaction among micro-organisms, our bodies, the products we consume, and even the buildings we inhabit. In doing so, they are making, and even ‘growing’, objects that are continuously mutable and adaptable — hallmarks of the plant and animal kingdoms (Schwab, 2016).

Industry analysis will become more difficult to perform as these changes take root in the near future.

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Heather Gough

Heather Gough is BPP’s Head of Digital Product Management which delivers support and learning through BPP’s online learning environment, The Hub. Her experience in this area also includes senior roles in strategic, setup and live online delivery of learning.


As an economics graduate Heather started her career in audit and assurance, becoming an ACA qualified Chartered Accountant at PwC. Her experience also covers teaching for over 15 years, programme management and overseeing client relationships.

By the end of this topic, you should be able to:

  • Critically evaluate and review the competitive environment by application of the five forces model
  • Explore the concept of strategic groups for industry analysis
  • Analyse and discuss how industries evolve with reference to the industry lifecycle
  • Demonstrate how trends in the macroenvironment can shape the nature of competition

ABOUT THIS DIGITAL MARKETING MODULE

External Analysis – Opportunities and Threats
Heather Gough
Skills Expert

In this topic, expert Heather Gough delves into the very dynamic world of External Analysis, specifically focusing on identifying opportunities and threats in an organization's competitive environment. Heather will begin by exploring the organization's competitive landscape, focusing on Porter's Five Forces Framework role in assessing industry attractiveness and competitiveness. She will also guide you in exploring the contemporary relevance of Porter's model by looking at industry convergence and the Fourth Industrial Revolution. You will then use the industry life cycle to learn how industries evolve and the unique stages of their evolution. Heather will then guide you through long-term analysis through scenario analysis, understanding its features, and the strategic significance of identifying and analyzing strategic groups. Finally, you inspect how the macro environment shapes the nature of competition, featuring a detailed exploration of PESTEL analysis and the role of SWOT in using the strategic insights gained by identifying both threats and opportunities.