In this manner the Porter model enables the organization corporate planning and strategy development to gain competitive advantage. In combination with PEST-analysis, five forces Porter's analysis can reveal the future attractiveness of industry. Political, technological, economic and socio-demographic changes can affect the five competitive forces and thus affects the industry structures. In this regard, tools such as scenarios may determine potential changes in competitive forces. If organization can analyze using the Porter's model, the current and future state of competitive force the management can develop options to influence these forces to their organizations interest. However, the organization must be aware of industry-specific models, which will limit options to compete effectively. But the organizations industry-specific strategies change the impact of competitive forces on the organization. In this respect, by influencing the power of five forces it has an objective to reduce the power of competitive forces by appropriate strategies so that it can change the impact of these competitive forces to its advantage and gain a competitive edge in the industry. For example, if one uses the Porters model to reduce the bargaining power of suppliers depending on its resources and competencies of its managers and staff it may pursue strategies such as partnering, supply chain management, supply chain training, increase dependency of suppliers, build knowledge of supplier cost and methods, and take over of suppliers or a combination of strategies which suits its internal strengths and organizational resources.
The corporations must aware that Porter's model has some major critiques in its value to develop strategies and options in its own and base their strategies only on the Porter model. The critiques of Porter model, are that it does not recognize the new entrants and other industries may completely change business model, entry barriers and relationship along the supply chain within short time and the Porter model do not give any advise for preventive action. As well, the Porter model is based on achieving competitive advantage in an industry, which does not take in to consideration the value of strategic alliances, electronic linking of information of all companies along the supply chain, virtual-networks and others.
Overall, the limitation of Porter's model arises from the fact it does not account for new business models and the dynamics of the market in the current market environment. It is necessary the corporations must be using other models in conjunction with Porter's model to develop strategies and must not rely heavily on the Porters model in its own. This is because the company may not consider other strategies and preventive strategies recognizing the dynamic nature of competition in the current market conditions and changes in business model used in other industries and by new entrants to compete effectively in an international arena. The corporations also must give due consideration of environmental issues, cultural issues and government regulation to enter in to new markets and to use of alliances, virtual networks and electronic linking of companies along the supply chain as strategies to improve their competitiveness in a global market place, which is dynamic in nature.
As discussed above in the Porters model a countries economic, political, technological and social factors affect the structure of industries and the quality of its resources in terms of human capital, managerial ability, entrepreneur culture, which determines productivity and cost structure and quality as well as to effectively respond to market changes in a timely manner. Even if the company identifies strategies using the Porter model it must be able to have the resources as explained above and competencies to implement such strategies. This capacity is dependent on economic, social, political and culture of a country. The structure of an industry is affected by these factors and it forces it affects the attractiveness of industry and the long-term profitability of an industry. This affects the profitability within an industry. The country, affects the future potential state of five competitive forces in a dynamic manner. It affects certainly the competitiveness of a company. That is the characteristics of a country affect the competitiveness of a company applying the Porters model.
In summary, competitive nature of an industry in the current global market environment is dynamic in nature. As the technological advances will become rapid every countries macro environment also will become more dynamic and unpredictable in the future. Nations and corporations must continually monitor the external environment and continually review their strategies is in these dynamic environment and to use a variety of models to develop strategies and review these models on a continual basis for its value for the corporations long-term profitability and competitive advantage. Countries must be able to create conducive environment for private sector to compete effectively and continually reform their economic, political and social institutional structure. In addition, the government must reform corporate governance of local and international companies so that the market system to work efficiently and allocate resources to industries and sectors, which will bring maximum benefit and to improve its productivity and potential for further technical and social progress.
