Interest in the study of the forces that impact an organization has continued to rise, particularly those that have shown to provide competitive advantage. The ideas and models which emerged during the period from 1979 to the mid-1980s (Porter, 1998) were all based on the idea that competitive advantage came from the ability to earn a return on investment that was better than the average for the industry sector (Thurlby, 1998).
As Porter’s five forces analysis deals with factors outside an organization that influence the nature of competition within it, the forces inside the organization (microenvironment) that influence the way in which organizations compete, and so the organization’s likely profitability is conducted in porters five force model. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace.
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