I think, Porter's 5 Forces is a great model for industry analysis. However, I really don't know if people in the field of finance use this model or not. Also, I don't know how useful it is in reality. It just seems good to me in theory.
Because of my knowledge level and limited experience, I don't see Porter's 5 Forces is helpful to me or do me a great deed. I feel that it is so complecated. I don't really know how to use it. Even I can follow all the guidelines, I believe I still can figure out which industry will be the best or good. Also, if we have to do all of these things to all the industries by using the Poter's 5 Forces model, it is going to be horrible. I don't think it is very applicable to me. There are a lot of information that required by the model is not accessible for me, an average person or lower then average.
I think, if I am an investor, I don't think I will follow the Porter's 5 Forces. I just want to know which one is the most profitable industry in the past, now and the near future. Also, i would like to know some key reasons behind them. I think it will help me more in this way. Also, it is much easier for me to find the answer. Furthermore, time is important. By the time we finish our analysis by the Porter's model, I think the best opportunities are gone already.
Porter's 5 Forces sounds good to me, but it is not applicable to me.
I think the Oil and Gas industry has very high barriers to entry. First of all, without really know about the industry but a very few information, we can think in this way. Oil and gas industry is one of the most profitable industries in the world now. Also, it is the most profitable time in history. Rationally, everyone one to take a piece of it, can it? Of course not, if everyone can take a piece of it, we all become rich, not just a very few people in the u.s. are rich, but the majority is poor.
Second, Oil and gas industry requires huge of capital and other investment.
Third, Oil and gas are getting less and less. It's so competitive itself. It's not easy to find more resources in this world. They are limited resources.
Fourth, govement has great influence in this industry. There are all kind of regualtion to blog people go into this industry. Also, OPEC is controlling this industry. It is just so hard to get into this industry in this day.
Although Oil and gas industry is one of the most profitable industries in the world, it is one of the most difficult industry for entrying.
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I think you really have some interesting thought when it comes to the effectiveness of the porter's five forces. I do agree with you one of the consideration of choose to enter into an industry is to see there past , current and future profit for that industry but in order to see the future profitability, dont you need to do some research like the suggested porter's five to make your projection? And would the porter's five also provide you some of the key factor to assess your decision?
Porter's 5 Forces might work if you're an investor.
Assume you were an investor and some people come to you about investing in their startup company or a company's IPO. Now, they can provide you all this basic information from charts, to growth, and other stuff.
But the real question is...Can they do it while playing on a bigger stage?
Porter's 5 might give you some insight into it. You'll be able to determine if they're just out of their mind or if they might actually stand a chance out there after you review their business plan. You'd have to be the judge of it of course.
So I think Porter's 5 will help you as an investor if it's a new company or something...beyond that, it won't help an investor really.
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