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Use the Force......

Everyone in the insight arena is becoming increasingly aware of a major difference between insight and its constituent disciplines (i.e. research, analysis, intelligence etc). This key difference is the ability to stand back and see the bigger picture.

Because there is usually so much data available, this can be very hard. For that reason, a number of frameworks have been developed that can be used in different situations. One of the most famous is Porter’s Five Forces, which provides a useful method for looking at how entire markets work.
 
Take five
Michael Porter’s approach has become an industry standard and should therefore should be ‘meat and drink’ to members of Insight teams. At the very least, you should be aware of the broad principles involved. These are based on work covered by Porter in his book published in 1980: ‘Competitive Strategy: Techniques for Analysing Industries and Competitors’.
 
Porter suggests that one way to really understand the dynamics of an industry or a market is to explore the five key forces that affect the way in which it operates. These are:
  • Competition between existing players (the central force)
  • The bargaining power of buyers
  • The bargaining power of suppliers
  • The threat of new entrants
  • The threat of substitute approaches or technologies
Whenever you’re looking at a competitive situation in any depth, you can use these five forces as a way of helping you to think around the subject from a range of different angles.
 
Delving deeper
To understand more about the basic principles behind Porter’s Five Forces, you might want to take a peek at one or two of the following references:
 
http://businessballs.com/portersfiveforcesofcompetition.htm - this also has a link to a diagram that explains the forces in more detail.
http://www.mindtools.com/pages/article/newTMC_08.htm - a clear article which explains the implications of each force.
http://www.12manage.com/methods_porter_five_forces.html  - this includes a discussion of the factors that influence the forces, as well as an online forum.
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