ACCA Strategic Professional · Strategic Business Leader · Competitive forces
Brightwater Streaming operates in a fast-changing digital market where new business models emerge every few months and industry boundaries blur. Its strategist uses a one-off Five Forces analysis to set a five-year strategy. Which limitation is most relevant to this decision?
Five Forces is a static snapshot that assumes clear industry boundaries, so it dates quickly in fast-changing digital markets where business models shift and boundaries blur. Relying on a one-off analysis for a five-year strategy is therefore risky; it needs regular updating or dynamic supplementary tools.
- AFive Forces cannot be used for service businesses
- BFive Forces is a static snapshot, so it is weak in dynamic markets with shifting boundariesCorrect
- CFive Forces ignores the bargaining power of buyers
- DFive Forces only measures internal competences
Explanation
The model gives a snapshot at one point in time and assumes a clearly defined industry. In hypercompetitive, fast-changing markets with blurred boundaries, the picture dates quickly. It does cover buyer power and applies to services, and it is external.
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