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ACCA Strategic Professional · Strategic Business Leader · Competitive forces

A consultant applies Porter's Five Forces to the online grocery sector for Fernhill Foods. Which of the following is a recognised limitation of the model that the consultant should mention?

A recognised limitation is that the model gives a static snapshot of industry structure and is hard to apply when industry boundaries are blurred or change rapidly. It does cover buyer power, is an external analysis, and is not limited to the public sector.

  1. AIt gives a static picture of an industry and can be hard to apply where industry boundaries are blurredCorrect
  2. BIt ignores the bargaining power of customers
  3. CIt considers only internal resources and capabilities
  4. DIt applies only to public sector organisations

Explanation

Five Forces looks at industry structure at a point in time and struggles when boundaries blur or the environment changes quickly. It includes buyer power and is an external, not internal, analysis, and it is used mainly for commercial industries, not only public sector bodies.

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