Six Forces Model

The Six Forces Model is a market opportunities analysis model, as an extension to Porter five forces analysis and is more robust than a standard SWOT analysis.

The following forces are identified:

• Competition
• New entrants
• End users/buyers
• Suppliers
• Substitutes
• Complementary products/ the government/ the public

Criticisms of the five force model

Porter's framework has been challenged by other academics and strategists such as Stewart Neill, also the likes of Kevin P. Coyne and Somu Subramaniam have stated that three dubious assumptions underlie the five forces:

• That buyers, competitors, and suppliers are unrelated and do not interact and collude
• That the source of value is structural advantage (creating barriers to entry)
• That uncertainty is low, allowing participants in a market to plan for and respond to competitive behavior.

An important extension to Porter was found in the work of Brandenburger and Nalebuff in the mid-1990s. Using game theory, they added the concept of complementors (also called "the 6th force"), helping to explain the reasoning behind strategic alliances. The idea that complementors are the sixth force has often been credited to Andrew Grove, former CEO of Intel Corporation. According to most references, the sixth force is government or the public. Martyn Richard Jones, whilst consulting at Groupe Bull, developed an augmented 5 forces model in Scotland in 1993, it is based on Porter's model, and includes Government (national and regional) as well as Pressure Groups as the notional 6th force. This model was the result of work carried out as part of Group Bulle's Knowledge Asset Management Organisation initiative.

It is also perhaps not feasible to evaluate the attractiveness of an industry independent of the resources a firm brings to that industry. It is thus argued that this theory be coupled with the resource-based view (RBV) in order for the firm to develop a much more sound strategy.

See also

• Context analysis
• SWOT analysis
• Porter's four corners model

References

• Andrew S. Grove, Only the Paranoid Survive: How to Exploit the Crisis Point That Challenge Every Company and Career, 1996
• Nalebuff and Brandenburger, Co-opetition, 1995
• McAfee, R. Preston, Competitive Solutions, Princeton University Press, 2002