Assessing competitive landscape – Porter’s Five Forces Model

According to PMI’s definition, a project is a temporary endeavor undertaken to create a unique product, service or result.  However, with so many projects going on within an organization at the same time, how do we as PMs know where does our project fit in?  And what impact will our projects bring to the organization?

Although projects are tactical in nature, I am in the view that the more working knowledge a PM has regarding the company’s business model and its competitive landscape, will enhance the PM’s ability to plan and execute their project more successfully.  In this post, I would like to highlight a strategic analytical tool that PMs can use to assess the competitive landscape of their company.  The name of this model is Porter’s five forces model.

Porter’s Five Forces Model

Porter’s five forces model is a strategic analytic tool invented by Dr. Michael Porter.  This model provides a framework for organizations to understand the macro environment that they operate in.  As the name suggest, the model contains five elements:  Threats of new entrants, Threats of substitutes, Bargaining power of suppliers, Bargaining power of buyers, and Industry Rivalry.  Through examining the threats from the environment, organizations should be better equip with competitors’ information to formulate their strategies.

Below is a short video that explains the model in more details:

How does this benefit project manager?

Understanding the competitive landscape of your company can provide you with more insights into why your organizations chose to start your project(s).  It might provide you with some context as to how the unique products or services created through the project will benefit the organization.  Moreover, with the insight gained through this analysis, PMs would be able to advise on business KPIs to help align business and project goals.

Sources of information

To conduct the porter’s five forces analysis, you will need to find information about the industry and the company you are analyzing.  If you work for a public company, you should be able to locate some of this information through the company’s annual report on the company’s website.  Or if you work for a private company, you will most likely need to seek this information through internal contacts.

In addition, the internet and business magazines are good places to get information on the industry news and any competitor news.  For high-tech companies, which is undergoing rapid changes with new technologies, I would recommend you tune into industry-specific innovation announcements to get a good grasp of upcoming new technology and assess how it can impact your company and your project(s).

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