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The Porter's Five Forces view offers the possibility to monitor and analyze the industry of an organization in order to determine the intensity of industry competition and its profitability. This is done by investigating the following five forces in its industry:

  • Bargaining power of suppliers: Is considered high if there are only a few suppliers which can deliver the raw materials, components, labor, and services the organization needs to create its value proposition. Is considered low when there are many alternative suppliers which can compete in terms of quality, price and variety of offering.
  • Bargaining power of customersIs considered high when the customers are able to put the organization under pressure, especially in the case that customers have many alternative products/services to choose from. Is considered low when customers have few choices. Can be lowered by introducing measures, such as loyalty programs.
  • Threat of new entrantsIs considered high when new entities can easily enter the industry of the organization, especially in cases of profitable industries with high returns. Is considered low when new entities face barriers to entry, such as strict governmental policies, high capital requirements, high switching costs, etc.
  • Threat of substitutes: Is considered high when there are many substitutes to the product/service an organization offers, which satisfy the same customer need, but is produced by using a different technology. Is considered low when there are few available substitutes. Is influenced by factors such as buyer's propensity to substitute, ease of substitution, the level of difference to substitutes, etc.
  • Industry rivalry: Is considered high when there are many competitors within an industry, with low differentiation and high exit barriers. Is considered low when there are only a few competitors that also do not compete directly in all aspects of their offering to customers.

Porter's Five Forces is one of the strategy views for ArchiMate® modeling and makes use of specific ArchiMate concepts.

Steps:

  1. In your ArchiMate model in the model browser, right-click the folder in which you want to add the Porter's Five Forces, and then click  New > Strategy > Porter's Five Forces .

  2. Click the newly added view in the model browser to open it. A Porter's Five Forces view with empty blocks is shown.



  3. Define the subject of your analysis. Open the canvas menu , click  to open the  Properties window, and in Subject, select the element that represents your subject of analysis. It can be any element from your model.



  4. Fill the analysis view by adding Assessment elements to the different blocks. Create new elements in the blocks on the view, or drag existing elements from the model browser onto the blocks.

     

    You can add a description to elements by selecting an element, clicking , and adding the description in the window that pops up.


  5. Score the elements with a metric. The data can be used for analysis goals.

    1. Open the canvas menu, and click  to open the metrics form. A list is shown of all elements in the view.

    2. Click , and select a metric. Repeat this for each metric you want to score elements on.

    3. Add values to the relevant elements, and close the window when you are ready.



The result is a filled Porter's Five Forces analysis with metric data that can be used for analyses, for example in  color views.

If you wish you can make changes to the presentation by changing the color of the category blocks and the way the elements look. For more information, see  Changing the presentation of a strategy or business model view.


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