Research On Porter 's Five - Force Model Based On ANP - BOCR Method

In this paper,we analyses the limitations of Poter’s five forces model from the basic assumptions on theories and the practical application.The article aims to propose a method to improve the Porter’s five forces model by considering the correlation between the internal factors in the model, and using the multiple criteria decision making method to quantify the five forces model.So that we can enhance the actual operability of the model and provide the theoretical support to help the managers to make strategic decisions.The defects of Potter’s five forces model and how to optimize the five forces model in order to give full play to the guidance of industrial competitiveness analysis are always the core problems in the field of strategic management. In addition, the traditional ANP method is used in the existing researches,which also ignoring the alternative set in building the system analysis structure.In this way,these researches can not take the major advantage of ANP which mostly used in the scheme selection.and fail to give concrete guidance for the decision makers. The proposed approach is expected to expand the five forces model into a workable system of analysis by improving its analytical power. It provides not only a new thought to optimize the five forces model in theory, but also the specific scientific decision support for the application in management practice.This paper proposes the ANP-BOCR analysis method based on the five forces model.The ANP-BOCR method is developed by Professor Saaty to evaluate the alternatives on the basis of the ANP method which is also put forward by him.The ANP-BOCR method analyses the complex decision-making problems by the network structure as the same way of ANP method.It operationalizes the five force model as a whole complex system composed of interrelated forces and their sub-forces with consideration of their interdependences. The ANP-BOCR method evaluates the industry competition in both input and output way by using the BOCR merits.The input factors consist of C(Costs) and R(Risks) while the output factors contain B (Benefits) and O (Opportunities).And B (Benefits) and C (Costs) are involved in the tangible factors currently,whereas O (Opportunities) and R (Risks) belong to the intangible influence factors in the future.In addition.the alternatives sets including the differentiation strategy,cost leadership strategy and focus strategy are added into the analysis structure.which is efficient and convenient for managers to evaluate and choose the strategic alternative. Finally, the working of the proposed approach is validated with the help of a case study example of the strategy selection of A company.The result shows that the provided method is reasonable and can effectively help managers make strategic decisions involved many uncertain factors.