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Analysis on Michael Porter’s Five Forces Model and Core Competence
 
1.0     Introduction
Since globalization facilitates the communication of information and resources, competences among companies become more and more intense. In order to grab some market share and have a place in their own line, companies have to design proper strategies to help them earn a higher profit margin and sustain that position over a long period. (Philip, 2003) Among all those theories concerning strategic management, Michael Porter’s five forces model and the core competence theory are very practical and both of them are often applied by companies to design their strategies to help them in facing challenges brought by other competitors.
This essay will evaluate Michael Porter’s five forces model and the core competence theory in a critique way. As to make it more clearly in explaining the advantages and disadvantages of both theories, this essay will use P&G as an example.
 
2.0     Brief introduction about Procter & Gamble
Procter & Gamble is a daily product manufacturer of the United States. It is also one of the biggest daily products company in the world. Established in 1837, Procter & Gamble now has more than 110,000 staffs all over the world. P & G enjoys a high reputation and acquires a very high market share in the line of daily products. It mainly deals with shampoo, hair conditioner，skin care，cosmetics, baby care products，women sanitary articles，medicine, food, beverage and personal cleaning supplies. In fact, many of our daily used products are all manufactured by P&G.
 
3.0 General view about Michael Porter’s five forces model
The five forces model is put forward by Michael Porter. According to Porter, there are five forces that influence and decide the competence intensity and market appeal in a line, namely they are suppliers’ bargaining power, buyers’ bargaining power, threat of potential new entrants, threat of substitute products as well as the rivalry among competitive sellers. (Michael Porter, 1980)
Firstly, bargaining power of suppliers has a great impact on the production of a company. It refers to suppliers’ ability to raise prices or reduce the quality of goods. (Mike, 2009) If the supplier supplies some products with unique characteristics and hardly can be substitutes by other products or the supplier has many partners and neither of the clients is the sole important client to the supplier, its bargaining power is stronger. For P&G, suppliers’ bargaining power is relatively low for the daily products are manufactured in a lower price and they are manufactured in low payment and high labor intensity countries.
Secondly, Buyers’ bargaining power can be strengthened if there are a few buyers and each of them acquires a large proportion in the sellers’ market. Thus, it will raise the costs of company and reduce their profit margin. (Charles & Gareth, 2012) For P&G, buyers’ bargaining power is also weak. Though there are many other daily products manufactures, P&G has a good reputation on its product quality, price as well as company image. Thus, buyers usually will stick to buying its products without shift to other brands.
Thirdly is about threats of potential new entrants. Along with bringing in some new force and new re本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。