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I worked on a Project a few months ago and found Porters Model highly useful.However,that is my personal opinion and want to gather more information on the same.
Porter's Five Force model can be used in a scenario where you want have more micro level Planning.
it gives you a detailed insight vertically and horizontally in a value system.
be it be a Production, Marketing or Finance.
SWOT is more of assessing a Scenario at a Macro Level which can give a bird's eye view of a situation or scenario.
SWOTS can be used in many ways. It is More specific when it comes to HR Function.
SWOT can be at times judgemental
I think, both the models have different information for making the business strategy.
Porter's model is to elaborate the threats to the business. But, it cant tell you, whether you have necessary strengths and opportunities to do the business.
SWOT can identify Strengths and Opportunities, which can be a basis for business, Weeknesses which needs to be addressed and Threats which needs to be evaluated for better strategic decisions.
Porter's model can help in understanding the threats better, in which porter defines5 different threats for the business.
Porter's Five Forces can be used when :
1) To determine the competitive intensity and therefore attractiveness of a market.
2) To look at the ‘balance of power’ in a market between different types of organisations.
3) To analyse the attractiveness and potential profitability of an industry sector.
4) For risk assessment.
SWOT analysis can be used even in the current business.
SWOT analysis is more wider and covers various domains.Porter's Model however is very specific and serves as a great tool in the planning and research of any Project.
SWOT analysis is for the consideration of macro level before making any investment or other corporate level decisions, where as Porter5 forces is used for the micro level to consider the compnay's competiteveness strength
Porters'5 forces are usually used to study an industry structure and to perform compitetors' analysis. SWOT is one of the tools which is used during this process and it is usable in many other cases such as preparing a business plan or planning for business development.
SWOT analysis would become more useful when used to identify a SBU's scope in a given point of time, for example to analyze Strengths, Weaknesses, Opportunities and Threats of a specific product or service in order to tweak its relevance in the market accordingly and to improve its value in customer's mind. Also to understand the current position the company occupies in the market among its direct competitors. SWOT analysis is a tool to be used for different purposes such as HR and Marketing as well as R&D. In the other hand, Porter's five forces can be extremely useful as a periodic tool for but not limited to Financial aspect of business especially in the corporate level. For instance if a given company might be considering a future merger or alliance to create unique synergy with another company, Porter's analysis can help draw a trustable balanced picture of the industry relevant to company's activity or aggregate resources. Both analysis SWOT and Porter's five forces pertain to define company's potential in the market, but Porter's five forces further analyze the existent rivalry, hence possibly better outlook.
Any one model doesn't give you all the answers since each of them have flaws, for example porter's focuses too much external environment leaving out internal environment analysis. Personally to get a really good view I would combine porters with SWOT so do SWOT for each of the porter's five forces criteria, now keep in mind you may not be able to find answers for each area but that's ok. Another good combination is SWOT and PESTLE.
Thanks a ton.
This looks like a practical way.
And,I do agree that whatever model we try ,they only give a fair picture of the situation.A lot of the same depends upon an individual's judegment & decision making capacity.
