Answered! What are The Porter 5, Segmentation analysis & strategic groups? How is this helpful in the corporate world? Why…

What are The Porter 5, Segmentation analysis & strategic groups? How is this helpful in the corporate world? Why do we utilize this methods for strategy creation?

Expert Answer

Porter’s Five Forces analysis is a framework for analyzing the level of competition in the industry by analysing five forces that determine the competition – Bargaining Power of Buyers, Bargaining Power of Suppliers, Competitive Rivalry, Threat of New Entrants in the industry and Threat of Substitutes.

Segmentation analysis helps in segmenting or dividing the product markets and consumers into different groups based on the consumer tastes and preferences, product characteristics etc.

Strategic groups involves dividing the firms in a industry into different groups based on common characteristics and similar strategies.

These frameworks and models help the firms in determining their strategies for long-term and short-term. They help the firms understand the competitive and external environments and design their strategies accordingly. While Porter’s Five Forces is the most widely used framework to study all the forces that influence the firm’s competitiveness, segmentation analysis clearly provides a strategic direction on various market segments and ensures the firm focuses on the specific segments.Strategic group helps the firm understand its peer companies and how it can differentiate to capture market share.

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