International Webinar - Industrial Analytics Driving Digital Information - 4

In the business world, industry analysis is an important tool that helps companies understand the state of competition in their market. One of the most well-known industrial analysis models is Porter's Five Forces Model developed by Michael Porter. However, like any other analytical tool, this model also has limits and limitations. Following are some of the limitations of Porter's Five Forces Model and why it is important to acknowledge them when conducting industry analysis.

1. Competition Focused Approach:
     One of the main limitations of Porter's Five Forces Model is its overly strong focus on analyzing the competition between firms in a market. This model does not consider external factors that may affect the industry as a whole, such as political, environmental or social factors. In the ever-evolving digital era, changes in technology, government regulations, or social trends can have a significant impact on an industry, but this model does not provide a comprehensive view of these matters.

2. Lack of Focus on Collaboration:
     Porter's Five Forces Model provides a clear picture of competition between firms, but pays little attention to the potential for collaboration between them. In some industries, collaboration between competitors can bring significant benefits, such as the development of new technology or increased operational efficiency. This model fails to consider the opportunities for collaboration that may exist, and thus, limits understanding of the dynamics of the industry as a whole.

3. Not Account for Quick Changes:
     Porter's Five Forces Model is based on the assumption that market and industry conditions are relatively stable. However, in today's business reality, change happens fast. Technological innovations, shifts in consumer trends, or changes in business models can change industry dynamics in no time. This model is unable to properly account for these rapid changes and, therefore, can provide a limited understanding of the future of the industry.

4. Not Recognizing External Economic Forces:
     Porter's Five Forces Model does not explicitly consider external economic factors that may affect an industry. Factors such as fluctuations in currency exchange rates, changes in interest rates, or global economic conditions are not included in the analysis. Though, these factors can have a significant impact on the strength of competition in an industry. Ignoring these factors can lead to inaccuracies in the industry analysis performed using this model.

To gain a more complete understanding of industry dynamics, it is important to combine Porter's Five Forces Model with other analytical tools and consider external factors that may affect the industry as a whole. In an era of rapidly changing business, flexibility and the ability to adapt to change are the keys to success. Therefore, industry analysis models must be continuously updated and improved in order to provide more comprehensive and relevant insights for companies.

The above material was delivered by a presenter from Indonesia in an international webinar held by STEKOM University in collaboration with Kuala Lumpur University from Malaysia. The name of the presenter is Wibi Ardi Alvianto, M.Pd. He is a Lecturer at STEKOM University in the Visual Communication Design Study program. The international webinar was held on May 23 2023 which was hosted by Ms. Novita. The media used in the international seminar is zoom and broadcast directly to Youtube. The event went very well and was quite lively, marked by the many participants who took part and the number of questions asked after the presenters finished delivering their presentations.

This international webinar activity is part of the implementation of STEKOM University's commitment to increase various international activities. This was done in order to realize the vision to become an international-class university. Various international activities carried out by STEKOM University continue from year to year. There are international activities that are sustainable and there are also some international activities that are not sustainable. All types of international activities are accommodated and regulated by the International department of STEKOM University.