Does the Porter 5 Forces Model work for international environmental analysis?
The Porter Five Forces model of business analysis has been used for the last thirty years as a tool for determining the various ways in which an individual market is subject to a number of key horizontal and vertical forces. Since its inception in 1979, the Porter model has been praised for the ways in which it allows numerous inter-connected but essentially separate factors to be considered in a highly sophisticated, complex model; furthermore, the system’s track record has been impressive, with firms in such diverse industries as air travel, energy supply and traditional manufacturing having benefited from the implementation of the model. As Ron Ricci and John Volkmann have suggested, “the model’s chief advantage is that it allows for live, real-world conceptualisation of the key forces” (Ricci & Volkmann, 2002, p. 52). However, the model has also come in for criticism, since it relies on the idea of Constant Returns to Scale (CRS), a largely discredited theory that suggests industri
