Interview with Michael PORTER:
1- My guess today is Michael Porter…Let’s remind our viewers what the five competitive forces are:
Well Tom, the basic idea of the five forces starts with the notion that competition is often seen too narrowly by managers and the five forces say that yes you’re competing with your competitors but you’re also in a fight for profit with an extended set of actors […] (The competition goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants, and substitute products)
The five forces are a kind of holistic way of looking at any industry, and understanding the structure underlying drivers of profitability and competition.
2 – I use these to think about my rival makes it difficult for me…:
There is underlying drivers for each one of the forces, and you can actually apply that every industry is different, every industry will have a set of economic fundamentals, but the 5 forces help you home in on: What’s really causing profitability, what’re the trends the most likely significant in changing the game in the industry, where are the constraints?
3 –
Airlines is a great industry […] It’s amongst the least profitable industries known to man, and the 5 forces allow you quickly understand why, let’s just go around the chart, the nature of rivalry is incredibly intense and it’s almost exclusively on price. It’s been very hard to differentiate, to get customers to wait even an extra 2 or 3 minutes for another flight if they can get on the flight with a cheaper price…There has been a very intense price competition and there are some new comers despite the fact that profitability is low, it’s a generic technology and you can start with only one flight between two city pairs, there is no need to have a whole network at the beginning, and people keep coming in.
I Think it is one of those sexy industries, it’s a great example of how sexiness, or coolness or hotness