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ACCA Strategic Professional · Strategic Business Leader · Competitive forces

Verdant Pharma analyses the generic medicines industry using Five Forces. An adviser says the analysis should be extended to include a 'sixth force' that is often proposed as an addition to Porter's model, particularly relevant where firms offer products that work together, such as phones and apps. Which is the sixth force being referred to?

The sixth force usually proposed is complementors: organisations whose products or services raise the value of the firm's own offering, as apps do for smartphones. Their presence or absence affects demand and industry attractiveness, which Porter's original five forces do not capture directly.

  1. AGovernment and regulatory influence as a stand-alone force
  2. BComplementors, whose products increase the value of the firm's own productCorrect
  3. CTechnological change as a stand-alone force
  4. DEmployees and trade unions as a bargaining group

Explanation

The commonly cited sixth force is complementors (the 'value net' idea): firms whose products make yours more valuable, like apps for phones. Other factors such as regulation are often added in PESTEL analysis rather than being the standard sixth force.

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