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YouTube

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YouTube

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Australia Post: Evaluation, strategies and criteria

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Australia Post: Evaluation, strategies and criteria

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Perplexity

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Perplexity

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Australia Post: worked outline, template

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Australia Post: worked outline, template

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Word

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Website

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Personal, Business, Enterprise & Government solutions

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Australia Post provides reliable and affordable postal, retail, financial and travel services.

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Perplexity

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QCAA

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YouTube

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Outback postie creates podcast about the world of ordinary Aussies 📪 | Landline | ABC Australia

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YouTube

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How does Australia Post’s market position compare to Royal Mail’s?

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How does Australia Post’s market position compare to Royal Mail’s?

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YouTube

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How does Australia Post’s market position compare to Royal Mail’s?

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YouTube

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Australia Post trial new store concept in regional areas

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Australia Post Reforms: Pathway to Profitability

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Australia Post Reforms: Pathway to Profitability

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YouTube

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Australia Post reforms to create ‘strong foundation’ on a ‘pathway to profitability’

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Great Australian Icon AusPost now dimmed

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Great Australian Icon AusPost now dimmed

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YouTube

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'Great Australian icon' AusPost has now 'dimmed' in the modern world

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Australia Post: Letter Delivery to be Reduced

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Australia Post: Letter Delivery to be Reduced

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YouTube

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Letter delivery to be reduced to every second day in Australia Post 'modernisation'

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New Daily

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Posties put parcels first as letter deliveries cut

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Letters will only be delivered every second day with Australia Post revamping its workflow to focus on parcel purchases.

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The Guardian

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Australia Post will end daily letter deliveries next year under new rules relaxing the requirement for five-day-a-week delivery.

The outcome of the postal service's modernisation review, to be announced by the Albanese government on Wednesday, means Australians will soon be receiving ordinary letters and unaddressed mail every other business day, a response to the long-term decline of letters and the post's first loss in eight years.

Australia Post had warned that without changes its $200m loss in 2022-23 would be the first of many. It was seeking to close some full-service post offices in metro areas and charging businesses more than households to send mail.

The chief executive and managing director, Paul Graham, described the "reform roadmap" as "a crucial first step in the modernisation of Australia Post".

"While this reform package will provide some meaningful financial benefits over the next four years, we look forward to working with the federal government on further reforms to ensure we remain financially sustainable beyond 2026," he said.

On Wednesday the communications minister, Michelle Rowland, and the finance minister, Katy Gallagher, will announce that after a period of consultation new delivery standards will be introduced for 98% of locations in 2024.

Under the new delivery rules posties will still pass every door on their round every business day, but half their round will receive only parcels, express and priority mail.

That half will alternate every business day, meaning parcels, express and priority mail will be delivered daily, while ordinary letters and unaddressed mail will be delivered every second business day.

The changes are based on trials co-designed by Australia Post and the Communications Workers Union.

The new rules would include allowing the post to charge a commercial rate for priority mail, which accounts for about 8% of addressed letters, within limits to be set by a statement of expectations in 2024.

Graham said the announcement "recognises we need greater flexibility to acknowledge the true cost of mail delivery".

"Today's reforms provide us with additional scope to adjust our pricing when needed, while maintaining the checks and balances on stamp prices that Australians want."

In September Australia Post asked the competition watchdog for permission to raise the cost of basic postage from $1.20 to $1.50. Prices for concession card holders will remain at 60c and the price of Christmas stamps will remain unchanged at 65c.

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Australia Post delivered about half a billion parcels in 2022-23 and the average Australian household now receives just over two addressed letters a week.

Rowland said "Australia Post can't stand still". "Consumer and small business demands are changing and Australia Post also needs to adapt," she said.

"These new processes will mean Australia Post continues to deliver the high-quality letter service many Australians rely on, while also growing its booming parcel business for the benefit of consumers, small businesses and its hardworking staff."

Gallagher said "in an environment where customers are sending fewer letters and more parcels, it is important that the business structure of Australia Post reflects the needs of the modern Australian consumer".

"The fiscal sustainability of Australia Post is vital to the government's ongoing commitment to provide high-quality postal services to Australians."

Graham said the government had also "agreed to update the outdated methodology used to classify our network in rural and remote Australia, which was based on the 1991 census".

That change is expected to reclassify about 70 outlets, but the government insists this will not affect services at the outlets or the minimum numbers of post offices that Australia Post must retain in regional Australia.

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Modern mail: Australia Post to end daily letter deliveries in a bid to avoid losses

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Move comes as the national postal service hopes to bring in changes after last year's $200m loss

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New Daily

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SBS News

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Key points

Australia Post is struggling due to a sharp decline in its letter delivery business.

Parcel deliveries are growing, but the sector is increasingly competitive.

The federal government has asked Australians to share their thoughts on how to modernise Australia Post.

Its parcel delivery business is growing steadily thanks to our new thirst for online shopping, but it's facing stiff competition from courier providers in terms of delivery times, reach, quality of service and price, at a time when delivery costs are rising.

So how does Australia Post work, why is it in trouble now and what could this mean for the future?

How is Australia Post managed and funded?

Much of the network is operated by private individuals acting as licensees, agents or franchisees.

Why is it in trouble?

Australians received an average of 2.4 letters each week in the 2022 financial year, down from a peak of 8.5 letters in the 2008 financial year. By the end of the decade, Australia Post expect us to receive less than one letter per week.

At the same time, post offices conducted 192 million transactions in the 2022 financial year, 22 million fewer than in 2019.

Australia Post has said it expects visits to keep declining with the continued shift to digitised services.

Meanwhile visits to Australia Post's digital channels were up 25 per cent in the 2022 financial year from the previous year to 902 million.

Parcel business becoming 'highly competitive'

Australia Post delivered 526 million parcels in the 2022 financial year, more than double the 226 million it delivered in the 2013 financial year. And it expects parcel volumes to grow in line with longer-term retail trends.

Australia's courier, express and parcel (CEP) market as a whole delivered one billion parcels in 2021, with the average Australian receiving more than 40 parcels each year, according to an

"Most of the players are developing a competitive edge through the infusion of technology in their systems, like the use of drones and WMS system," it added.

Will we see less regular letter deliveries?

There are more than 4,300 post offices throughout the country, with more than 2,500 of these in rural, regional and remote areas, while Australia Post directly employs more than 36,000 people and more than 60,000 indirectly.

Minister for Communications Michelle Rowland said the government wanted to help Australia Post adapt to changes in technology, commerce and consumer expectations.

"I encourage all Australians to have their say, especially small businesses. Your opinion will help us as we consider options to shape postal services, and sustain Australia Post now and into the future."

What does Australia Post say?
The government has set up a web page explaining the review and .

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'Unstoppable decline': The reasons why Australia Post has to change

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Australia Post says its business is "on a path towards significant losses that, without change, will have to be covered by the Australian taxpayer". Australians are now being encouraged to have their say to save it.

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Australia Post Daily Letter Delivery Officially Cut

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Australia Post Daily Letter Delivery Officially Cut

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New Daily

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Stimulus Business 2024 IA3 Australia Post

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Stimulus Business 2024 IA3 Australia Post

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QCAA

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QCAA

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ChatGPT

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Could you please provide me with a SWOT analysis of Australia Post

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Functions of a business - marketing, finance, human resources and operations

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Functions of a business - marketing, finance, human resources and operations

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Scotty breaks it down

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Functional areas in a business refer to different departments or sections that perform specific tasks, such as marketing, finance, operations, and human resources. Each functional area has a unique role in achieving the overall business objectives, and they need to work in cooperation to ensure that the company operates smoothly and effectively.

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ChatGPT

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What human resource strategies does Australia Post use

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ChatGPT

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What finance strategies does Australia Post use

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Chat GPT

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What operations strategies does Australia Post use

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Chat GPT

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What marketing strategies does Australia Post use

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Scotty breaks it down

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Scotty's Report Style Guide

A business report serves as an essential tool in strategic decision-making, providing comprehensive, data-driven insights on company performance, challenges, and opportunities. It assists leaders in making informed choices, detailing the rationale behind proposed changes or strategies through evidence-based analysis and clear recommendations. Its standardised format ensures focused, effective communication, aiding strategic initiatives.
This page is a guide for those looking for a starting point to construct a report. There are different ways to format and structure a report, these are suggestions based on Scotty's style guide.

There must be a consistent 'look and feel' to a report, and this is achieved by using formatting conventions that cover aspects such as page layout, type, and text.

A general structure for a report consists of clearly labelled headings and sub-headings that are consistently formatted.

'Figures' is used in this style guide to describe diagrams, graphs, sketches, photographs, screenshots, and maps included in either the body of the report or in an appendix.

Figures are used frequently in reports as they convey significant amounts of information quickly, and this also reduces the word count.

A figure needs to be numbered in italics, e.g. Figure 2. and titled. This is known as the label. The label is directly below the Figure, followed by the reference.

The full reference must be included in the reference list unless it is a figure that you have created yourself. All figures should be numbered in the order they first appear in the text.
Tip: Font size is to be smaller than the body text.

Figures must be referred to in the text by their label.

Do not use 'see Figure above' or similar.

Figures must always be on the same page as their content.

Examples of how to refer to figures in body text:
Although the population growth rate is positive across most states (Figure 1), there is a clear issue with population growth in the Northern Territory.

Figure 1 shows the lack of population growth in the Northern Territory (Australian Demographic Statistics 2019) and supports the view that Victoria has the fastest population growth.

Tables contain data in rows and columns. They may be in either the body of the report or in an appendix. Tables are used frequently in reports as they can convey significant amounts of data in a condensed format. A dash (-) in a table indicates no data.

A table needs to be numbered, e.g. Table 2. and titled. This is known as the label, which is. directly above the table. The reference is below the table.

The full reference must be included in the reference list unless it is a table that you have created yourself. All tables should be numbered in order they first appear in the text.

Words are used for numbers up to one hundred and common fractions.

Example: 'one-fifth of the class'.

Use figures for numbers:

preceding measurement, for example, 3 cm

grouped in figures, for example, 3 of 21

in statistics, for example, 4% of the population

in times, dates, ages, money.

A reference is a way of acknowledging the source of information. This is someone's intellectual property. It could constitute plagiarism if there is no acknowledgment.

A reference list only includes the sources referred to in the report. It is not a bibliography, which also includes all texts and other sources that have been consulted as part of the investigation, even if they are not referred to in the report.

Reference list examples

There are many sources of information that must be referenced in a specific way. Swinburne University has released an excellent document that set out how to use APA referencing (Swinburne, 2019). Below are a few examples of how to reference using APA.

In-text citation examples

When an abbreviated version of the reference is included in the body of the report, it is known as an in-text citation.

INTRODUCTION

Write four separate sentences here to introduce the report, so the reader knows what to expect in it.
If there are any assumptions made by the writer, then they are mentioned here.

One sentence for the background - What business the report is about - the existing situation. This sets the scene for the reader.

One sentence for purpose - Why the report was written and what the investigation is aiming to achieve - the main questions it intends to answer, such as Do they have a competitive advantage? Are they operating effectively? Is it a good investment?

One sentence for what is in scope - What the report covers.

One sentence for what is out of scope - What the report does not cover - any limitations such as cost, time etc

BUSINESS PROFILE

This is an overview of the business so that the reader understands what is being discussed in the rest of the report. Therefore, it is 'describing' only - no explanations or questions. It may be titled 'Business overview'. There are usually several components, so consider using subheadings.
Example of sub-headings

Business profile (or overview)

2.1 Business overview (structure, useful facts)

2.2 Business Environment (information about the industry)

2.3 Business Situation (about the business in the current environment. Could include challenges, barriers of entry, potential, the problem the business is facing.)
Criterion: Describing

Have you included the important facts, features, and characteristics of the business?

Have you described the business environment and situation as set out in the task?

Have you used appropriate business terminology in this section?

STRATEGY EXPLANATION

The title/s of the headings in this section will depend on what you have been asked to do in the task.
Examples of sub-headings 3. STRATEGY NAME
3.1 Innovation
3.2 Entrepreneurship

Strategy Name
3.1 Roles and personnel
3.2 Financial considerations
3.3 Legal requirements
3. NAME OF STRATEGY
3.1 IMPACT ON OPERATIONS
3.2 IMPACT ON MARKETING
Criterion: Explaining

Have you identified the most important elements of the concept, strategy or processes?

Have you clearly explained the concept, strategy or processes you are writing about and the relationship to the business?

Have you used appropriate business terminology in this section?

ENVIRONMENTAL ANALYSIS

Every business report investigates the environment in which the business operates to identify and analyse factors that may impact on the success of the business.

Analytical tools are used to identify and understand patterns, trends and relationships. Some are SWOT, STEEPLE, Porter's five forces, competitive analysis, unique selling proposition (USP analysis), force field analysis and power interest grid (PIG).

The analytical tool is included as an appendix or body. However, the summary is included in the body of the report. If there are two tools used, then their results are both summarised here. This section may have other tables or figures that support the summary in some way.

This section is about examining information to find patterns, similarities and differences. It is about exploring, comparing and contrasting the information. It is important to make sure that there are no suggestions or conclusions here. Think of this section as the evidence that will be used to support the next sections.
Examples of sub-headings

Environmental analysis
4.1 SWOT Analysis of Company
4.2 STEEPLE Analysis of Company
4.3 Internal Summary
4.4 External Summary (includes the external from the SWOT and the STEEPLE)
Criterion: Analysing

Have you chosen the best information you can find to provide a useful analysis?

Have you gathered information from both primary and secondary sources?

Have you analysed the information (data) to create a useful summary?

Have you closely tied the analysis to the business situation?

CONCLUSIONS

This is one of the most important sections. You were asked to prepare the report because of your expertise, so now you must interpret the information in the analysis and draw conclusions.

IT IS IMPORTANT THAT YOU DON'T:

introduce new information

speculate or exaggerate

suggest any actions

offer an opinion

There may be more than one conclusion, especially if more than one analytical tool has been used in the report. Two examples of conclusions -

Based on the analysis, Scotty's Soda Stream Pty Ltd, is not in a secure financial position. The data indicates that......., improvements in operations to improve efficiencies are required in the short-term, if the business is to become financially stable within the next year.

It is apparent from the data analysis that Scotty's Soda Stream Pty Ltd, is overstaffed in the metropolitan area and that operational processes are out-of-date. As a result, the financial position of the business will continue to decline unless this human resourcing oversight is corrected.
Criterion: Synthesising

Have you noted the important relationships, patterns and trends in both the internal and external business environment?

Have you drawn your conclusions based on these relationships, patterns and trends?

Have you made a good summary statement about the business situation?

EVALUATION

This is what the person who commissioned the report wants to know. You draw on the information in the sections above to make this evaluation. There must not be any new information here. This section has two parts to it:

Judgement/s - Decide the merit, value or significance of whatever you are investigating, based on criteria.

Recommendations - based on the judgments

Two examples of sub-headings

1. Evaluation
5.1 Efficiency
5.2 Competitiveness
5.3 Summary
5.4 Recommendations
or

2. Evaluation
6.1 Operations management
6.2 Human resource strategies
6.3 Summary

Make a decision
Decide about the main questions that relate to the purpose of the report, as set out in the introduction. In other words, tie the end back to the beginning of the report.

Do they have a competitive advantage?

Are they operating effectively?

Are they exhibiting critical success factors?

Is it a good investment?

Is there likely to be a long wait before there is a return on investment?

Justify your decision

All business decisions must be justified against business criteria. A decision must be shown to have merit, be advantageous in some way. The four criteria for evaluating a business are:

Competitiveness

Stakeholder satisfaction

Efficiency

Effectiveness

If you have been asked to use two of these, then make sure that you use them both to justify your decisions in both areas that you are investigating, such as human resource strategies and financial strategies.
Criterion: Evaluating

Have you made judgement/decision?

Have you justified these judgements/decisions using business criteria?

RECOMMENDATIONS

Recommendations should follow on logically from the judgements. Write an introductory sentence and then provide one or more recommendations about what the person who commissioned the report should do. Often recommendations are presented in point form.

A recommendation is a specific, action-oriented suggestion to solve the problem or answer the question that triggered the report. They go in descending order of importance. Powerful recommendations often begin with an imperative verb. An imperative verb is an action word that gives a command.
Two examples
It is recommended that the event organisers:

restrict the number of people attending the event to minimise the risk of participants being crushed because of overcrowding

erect a three-metre-high wire barricade around the venue to stop unauthorised entry

issue passes to people who leave the event and intend to return so that authorised participants can enjoy the full festival.

It is recommended that the organisation reduce its financial exposure by:

recruiting a qualified accountant to...

not extending any more credit to slow payers to avoid...

hiring a debt collection agency to...

Criterion: Evaluating

Have you made recommendations that follow logically from your judgements?

FINDING INFORMATION FOR YOUR STEEPLE ANALYSIS (8 mins)

WRITING A CONCLUSION (5 mins)

JOINING THE DOTS (2 mins)

STARTING THE EVALUATION (4 mins)

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Scotty's Report Style Guide A business report serves as an essential tool in strategic decision-making, providing comprehensive, data-driven insights on company performance, challenges, and opportunities. It assists leaders in making informed choices, detailing the rationale behind proposed changes or strategies through evidence-based analysis and clear recommendations.

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Cascade

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Every business strives to prevent its competitors from stealing its profits. With today's fierce competition in almost every industry, it's not a question of if, but it's a matter of how...

Porter's 5 Forces is a straightforward strategic framework that can help you answer these questions and reduce the share of profit leaking to your rivals:

What forces beyond direct competitors shape your industry?

What makes your industry profitable?

Where can you find a position amongst your competitors that is profitable and difficult to attack?

You can use Porter's Five Forces Model to take a step back, analyze and fully understand your competitive environment before you make any strategic decisions.

In this article, we will give you an overview of Porter's Five Forces competitive analysis framework, explain key pitfalls you need to avoid during industry analysis, give you examples of the model in real-world, and show you possible strategies you can undertake to create a winning position in your industry and among your competition.

🎁Bonus! We will also provide you with free templates to help you implement this framework to strengthen your business strategy.

TL;DR

Porter's Five Forces are Threat of new entrants, Bargaining power of buyers, Bargaining power of suppliers, Threat of new substitutes, and Competitive rivalry.

This framework helps strategists understand what makes an industry profitable and provides insights needed to make strategic choices.

It's applicable to any industry and company size.

Pros: A strategic tool that gives you a complete picture of what drives profitability and helps you identify disruptive trends early on.

Cons: This tool is outside-in and requires a great deal of research and analysis to uncover new information.

What Are Porter's 5 Forces?

Porter's Five Forces model is a strategic framework that helps to identify and analyze five forces that affect a company's profitability in any given industry. These five forces are:

Porter's Five Forces Diagram

1. Threat of new entrants

2. Bargaining power of suppliers

3. Bargaining power of buyers (customers)

4. Threat of substitutes

5. Competitive rivalry

Porter's Five Forces model is a critical element of strategic analysis that helps companies decide how to shape the balance of competitive forces to maximize profitability.

Based on the framework, companies should position themselves where forces are weakest, exploit changes in the forces, and design those forces to their advantage (Porter, 2008).

Advantages Of Porter's Five Forces Model

Organizations can learn how profit is divided among the five forces.

It enables organizations to identify which players are in control and set rules.

It provides company strategists with insight and a baseline to evaluate the company's strengths and weaknesses.

It provides a holistic overview of any industry and helps strategists identify the most important factors that can affect their position in the industry.

It helps strategists to think more comprehensively about the industry structure and discover non-obvious opportunities that can also attract higher investments and affect the company's future growth.

The advantages of Porter's 5 Forces model are:

Porter's 5 Forces: In-Depth Overview

An analysis of all five competitive forces gives you a comprehensive view of the factors affecting profitability in your industry. When you understand each force, you can formulate a strategy that will allow the company to better cope with competitive forces and increase profit potential. Let's take a closer look at each force:

1. Threat of New Entrants

When an industry starts becoming profitable, it will entice new entrants. If the barriers to entry are low, new entrants can easily capture market share and threaten profitability.

New entrants undercut prices and offer valuable alternatives to what your industry currently provides.

A practical example of a new entry and high threat to existing players is Apple's entrance into the music distribution industry with the iPod. Apple entered into a new market, stole market share from existing players, and completely changed the way we consume music and audio content today.

On the other hand, if barriers to entry are high, it's much harder for new entrants to threaten your industry's profitability.

1. Supply-side economies of scale: Production at higher volumes and low costs per unit force new entrants to come in on a large scale or at a cost disadvantage.

2. Network effect: Buyer's willingness to pay increases as the number of buyers or sellers for the business grows. Customer loyalty or a buyer's preference for a bigger "network" discourages new entrants by limiting buyers' willingness to buy from someone new.

3. Switching costs: The higher prices/costs a customer has to pay to switch from one supplier to another, the higher the entry barrier will be.

4. Capital requirement: The entry barrier can be significant for new entrants on account of the hefty financial investment required. However, investors can provide new entrants with the required capital if the industry returns are high and lower the entry barrier.

5. Unfair advantage: Industry leaders have cost or quality advantages derived from resources that are hard to copy. An example would be patent technology, exclusive access to raw materials sources, a strong brand identity, or a favorable geographical location.

6. Unequal access to distribution channels: Considering the power of existing players, it might be difficult for new competitors to break into existing distribution channels. As an alternative, companies typically bypass traditional distribution channels or create new ones. An example is low-cost airlines that started selling tickets on their own websites.

7. Government policy: Government policy can lower or increase entry barriers for new entrants. Licensing requirements, for example, can increase entry barriers. In contrast, subsidies can make entry easier.

According to Porter, there are 7 main sources that influence the height of entry barriers:

How expensive would it be, and how long would it take a new competitor or startup to enter your market?

Is there strong customer loyalty in your industry? Would it be difficult for a new competitor to woo customers away from your products or services?

Are there any additional barriers to entry a new player could encounter (e.g. regulation, intellectual property, access to distribution channels, etc.)?

What's your industry structure like? How strictly is it regulated?

Is your key technology protected?

Questions you can use during analysis:

2. Bargaining Power of Suppliers

Suppliers offer your industry the needed inputs to operate (e.g. components, materials, and services). When the bargaining power of suppliers is high, there's a strong chance your suppliers could set higher prices for those inputs or reduce quality without retaliation.

If you have a number of suppliers to choose from, their bargaining power is likely low, so you will not have a problem switching suppliers if needed.

As an example, let's take a look at the automotive industry.

Volkswagen Group's suppliers have limited bargaining power due to VW's global presence with suppliers scattered around the globe. On top of that, Volkswagen has at least 1 or 2 backup suppliers for each part and can shift demand between them.

On the contrary, many automotive suppliers manufacture only a specific part and are heavily dependent on the industry. These dynamics of the automotive industry put Volkswagen in a superior position while its suppliers have relatively low bargaining power.

If you don't have the option to choose between a number of suppliers, there is no substitute for what the supplier provides, or the switching cost of suppliers is high, they will have stronger bargaining power, and you will have to rethink your business strategy.

Who are your key suppliers?

How many competent suppliers does your company have to choose from?

How many alternative suppliers can you find?

How difficult or expensive would it be to change your suppliers?

Questions you can use during analysis:

3. Bargaining Power of Buyers

In Porter's Five Forces model, buyers are your customers. At the expense of industry profitability, strong buyer power can lower prices, pit rivals against each other, and demand higher quality or service.

The power of customers is higher when they are few in number and have many sellers to choose from. Beyond this, if a large portion of a seller's revenue is determined by a handful of buyers, those buyers will have more leverage.

Switching costs should also be considered when determining the buyers' bargaining power.

How many potential buyers are in your industry compared to the number of sellers?

Does a handful of buyers make up the majority of your revenue?

What is the size of the orders you receive?

How easy would it be for your buyer to switch from one seller to another?

Questions you can use during analysis:

4. Threat of Substitute Products or Services

All firms in an industry are competing with other industries that make substitute products or services. An example is a messaging app that is a substitute for e-mail. Or an airline website replacing travel agents with its own ticket booking system.

If buyers can satisfy their needs with a different product or service from an alternative industry, that will put a lid on how high your industry can set its price.

The more attractive a substitute, the firmer the lid on industry profits. If there are many substitutes that can perform a similar function as your product or service, then the threat of substitutes is high.

If there are few substitutes that provide the same function as your product or service, the threat of substitution is low.

How many substitute products/services are in your industry?

How similar are those products/services from a functional standpoint?

What differentiates your products/services from those substitutes?

Are those products/services affordable?

What is the buyer's cost of switching to a substitute product? Is it low-cost or high-cost?

Are you able to offer a new product or service that can become a substitute for a market leader? If so, what is it?

Questions you can use during analysis:

5. Competitive Rivalry

Although rivals are subject to the same industry forces as yourself, the force of competitive rivalry is often the largest determinant of an attractive industry since it is affected by the four previous forces. In order to capture their share of the market, rivals will compete on price, quality, service, marketing spend, etc.

Competitive intensity is the highest when your buyers have plenty of alternatives, there is little service or product differentiation between rivals, and when industry growth is slowing. If the buyer can choose from a fair number of competitors, the buyer can start bidding wars and reduce profits.

When there is little differentiation between rivals, your product or service will be perceived as a commodity, and the buyer will purchase solely on price.

If an industry's growth is slowing, the existing firms will be in a fight to maintain their piece of the market share. We've written extensively about VRIO Analysis that can help you find your competitive advantage and then turn that into a sustainable competitive advantage.

What is the number of competitors in your industry?

Who is your biggest competition?

What makes your product/service different from your rivals?

Are there any barriers that would prevent your customers from switching providers? If so, what are they?

Is your industry shrinking or growing?

Questions you can use during analysis:

Porter's 5 Forces Examples

The following examples illustrate how Porter's Five Forces Analysis might be applied in practice.

Five Forces Analysis in higher education

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The following is an example of Porter's Five Forces Analysis applied to higher education:

Under each force, you should evaluate the threat, ranging from low to high. As shown in this example, the most important threats, in this case, are: bargaining power of buyers, threats of substitutes, and competitive rivalry.

Five Forces Analysis in the airline industry

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Here's an example of an analysis for the airline industry that was developed and framed for the International Air Transport Association (IATA) by Michael E. Porter himself:

As you can see in this example, there are times when you will need to prioritize and make a decision. If you detect high threats in all 5 forces, think about where you need to focus to make the most impact.

Five Forces Analysis in the music industry

Source.

Spotify has completely disrupted how the music industry functions and how people consume music. But, as we signaled before, the competitive environment is dynamic, and you need to iterate on your Porter Five Forces Analysis to understand changes in your position.

Bargaining power of suppliers: music labels and artists hold significant control over licensing agreements and royalty rates.

Competitive rivalry: streaming platforms such as Apple Music and Amazon Music intensify the pressure on Spotify to differentiate its offerings and retain subscribers.

In Spotify's example, the highest threats are:

Five Forces Analysis in retail: Walmart

Source.

In today's dynamic business landscape, the retail industry experiences constant changes in market dynamics and consumer preferences. Even for a dominant player like Walmart, these changes bring both new threats and opportunities.

Walmart operates in an industry characterized by intense competitive rivalry, as it faces strong competition from both traditional retailers and e-commerce giants such as Amazon. This rivalry puts pressure on Walmart to continuously innovate, offer competitive prices, and provide a superior shopping experience to maintain its market share.

Five Forces Analysis in transportation: Uber

Source.

Uber, the trailblazer in the transportation industry, has revolutionized the way people get around and explore cities. As the industry continues to evolve, it presents a dynamic mix of challenges and opportunities for Uber's growth and success.

Uber faces threats from the bargaining power of buyers (riders). With strong competition from ride-hailing alternatives, traditional taxis, and high car ownership, riders have numerous options to choose from, giving them significant influence over pricing and service quality.

Uber also encounters fierce competitive rivalry, along with the rise of numerous locally-focused new entrants. This dual challenge has the potential to weaken Uber's financial standing and allow regional players to capture market share in their specific areas.

Weaknesses Of Porter's Five Forces Model

Not putting in enough effort to discover and understand the 'why' behind observations.

Lack of engagement with stakeholders during the competitive analysis can result in obstacles that could be prevented from the get-go.

Not understanding the goal of Porter's Five Forces Framework. The goal is to use insights to formulate a business strategy, not to declare whether the industry is attractive or not.

Strategies fail because managers and strategists define the industry in which the competition takes place too broadly or too narrowly. On top of that, strategists shouldn't ignore the possibility of shifting industry boundaries.

Some authors and sources say that innovation should be considered one of the forces that drive industry competition. However, Porter argues that technology and innovations are fleeting factors that are not enough to make an industry attractive or unattractive.

These are some possible limitations and pitfalls, as noted by Michael E. Porter himself and other experts:

There are also many resources criticizing that the 5 Forces model is a static tool. The main argument is that the framework gives a snapshot of competitive forces at a single point in time. However, Porter never stated that these five forces remain unchanged. Strategists have to periodically reassess five forces as well as keep an eye out for creative approaches taken by their existing or new competitors.

TIP: Porter's 5 Forces model is an outside-in-facing tool that analyzes only external factors that impact a company's profitability. You can do a comprehensive strategic analysis using additional tools and frameworks, like SWOT analysis, PESTLE analysis, Blue ocean strategy, or Value chain analysis.

📚 Recommended read: 6 Competitive Analysis Frameworks: How to Leave Your Competition In the Dust

How To Apply Porter's Five Forces Analysis?

Using Porter's 5 Forces, you should start to understand the forces that shape your industry. The next step is to identify how your company is going to compete and formulate a competitive strategy.

Ideally, you want to sit in a position where you can balance the 5 Forces and maximize your profit. The key question to answer here is how you are going to achieve a competitive advantage that will put your organization in a winning position.

Relationship between Porter's 5 Forces and generic strategies. (Image source)

Porter developed three generic strategies that can be used to create a defendable position and outperform competitors. These strategies are cost leadership, differentiation, and focus on a particular niche.

Here's a quick overview of each:

Cost Leadership Strategy

Cost leadership is a strategy that focuses on reducing the costs involved in providing a product or service. By running a lean operation and reducing costs across different departments, you'll maintain healthy margins and profits.

Differentiation Strategy

A differentiation strategy focuses on providing a product or service that is perceived as being unique and hard to replicate. Buyers won't find anything like your product or service in the market allowing you to charge higher prices.

Focus Strategy

A focus strategy looks at serving a specific target market better than anyone else in this industry. By acquiring a deep understanding of your specific customer, you'll be able to serve your customers more effectively and efficiently than the competitors who are working across the entire industry.

Don't Get Stuck In The Middle

Which strategy is your organization working towards? It's not uncommon for organizations to successfully pursue more than one strategy, especially if your industry is growing and profitable.

However, as industries mature, the companies that are unclear about their strategy often see their profits dwindle. When companies fail to focus their efforts on any one of these 3 strategies they are, as Porter calls it, "stuck in the middle".

Companies that are stuck in the middle lack the investment and resolve needed to be a cost leader, the unique product offering to pursue differentiation, and the attention required to pursue focus... in the long run, it's a losing strategy.

If you are stuck in the middle, it's important to start aligning your company with one of these strategies. Not sure which strategy to pick? Choose a strategy that is hardest to replicate and that is best suited for your company's strengths.

If you're interested in easy-to-follow methods for identifying your strengths, check out our internal analysis article that covers different tools that can help you in the process.

Interestingly, the idea of focusing on a strategy is omnipresent in the realm of strategic planning.

Whether you're reading Michael Porter's Competitive Strategy, Stephen Covey's 4 Disciplines of strategic execution (BHAG), or Jim Collins' Good to Great (Hedgehog Concept), keeping an acute focus on one strategy is vital for success.

Porter's 5 Forces Template

To streamline your analysis, we've created templates that'll help you use Porter's 5 Forces Model very easily.

Cascade Template

This free template is easy to use and comes pre-filled with examples to inspire your analysis, but it can be tailored to fit your organization's needs.

The best part is that once you implement Porter's Five Forces Framework with this template in Cascade, you'll be able to follow up on your objectives and goals distilled from the analysis in the same platform to ensure you're on track. No need to switch between multiple tools and risk the possibility of losing context!

👉🏻How to use it? Just click on this link and create a free forever account in Cascade. That's it!

PDF Template

Although we highly recommend the Cascade Template, we know there are some PDF lovers out there. If you're one of those, we have a PDF Porter's 5 Forces Template just for you!

As you can see, this is the typical template that is used for this framework. You can download it here and add your organization's information.

Focus + Strategy Execution = 🏆

Once you've gone through analyzing your company's position with Porter's Five Forces Model, it's time to take those learnings and insights and put them into action!

But wait! Before going into formulating your strategic plan, think about the metrics that you want to achieve and start building your plan backward from there. We call this " reverse engineering your business," and the best part of this approach is that it ensures you're focused on the metrics that matter.

Once you know those metrics, start crafting the KPIs, projects, objectives, and focus areas that you'll need to work on to get to those key metrics you set. This is basically the process of creating your strategic plan.

📚 Check out our detailed guide that will take you step-by-step into writing a successful strategic plan!

💡Pro tip: To prevent being "stuck in the middle," remember to keep your strategy top-of-mind at all times. For example, if you're looking to pursue a cost leadership position, make sure you create goals focused on cost reduction and growing market share.

One final recommendation from our team of strategy experts: know that you cannot do this alone. Change requires buy-in from your people. Aligning your strategy across your organization can be difficult - it's even more difficult for everyone to keep strategy top-of-mind.

With Cascade, you can create and execute your strategy rooted in reality to ensure the implementation of your Porter's 5 Forces Analysis findings and initiatives is successful. You can invite your teams to collaborate and ensure company-wide alignment like never before. You can also leverage integrations to import data from multiple business tools.
Sign up today for a free forever plan or book a guided 1:1 tour with one of our Cascade in-house strategy execution experts.
Cascade allows you to connect your metrics, initiatives, and investments to your business performance and make better decisions, faster.

FAQs About Porter's Five Forces

What are the 5 elements in Porter's 5 Forces?

The 5 elements in Porter's 5 Forces are the Threat of new entrants, Bargaining power of buyers, Bargaining power of suppliers, Threat of new substitutes, and Competitive rivalry.

Is Porter's Five Forces model still relevant today?

Porter's Five Forces model remains relevant despite being on the scene for more than 40 years. It has its own limitations and can't be used as a standalone tool but it's an evergreen strategic tool that helps strategists make better decisions.
Porter, M. E. "How Competitive Forces Shape Strategy." Harvard Business Review 57, no. 2 (March-April 1979): 137-145.
Who developed the model?

Porter's 5 Forces model was developed and published by Michael E. Porter in 1979. The model was later updated by the author itself in 2008 and published in Harvard Business Review.

What is the difference between Porter's Five Forces and SWOT Analysis?

The main difference between Porter's Five Forces and SWOT Analysis is the fact that Porter's model analyzes only external forces, while SWOT Analysis takes into account both internal and external factors.

Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Special Issue on HBS Centennial. Harvard Business Review 86, no. 1 (January 2008): 78-93.

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