DSpace at Khazar University

ones by operating proactively upon them: for example, by creating switching costs, or in
establishing stronger barriers to entry by building strong brand names.
Further advantage is possible through rating the strength of each of r five forces.
This will help to focus attention on the main competitive Colors in each segment, and to
compare the attractiveness of each segment. A simple points system would be: 1 = a
weak force, 5 = a strong force. Under such a schema an "attractive" industry would be
one scoring 12 points or less. The disadvantage of such a simplistic is that it assumes
each force is equally important. But in, for sample, a patent-dominated industry, or a
defense industry, barriers to entry, or supplier power respectively would merit aboveaverage
weighting. However, this could be allowed for in an amended scoring system.
This conglomerate has businesses that compete in a wide range of product
markets, from newspapers, through TV to banking. Emily Bell recommends that
Pearson should focus on one type of business. In making a choice of where it should be
operating, a sound understanding of the markets Pearson currently competes in would
be beneficial. Then they could assess the extent to which Pearson has the competences
to compete successfully in each of these markets. This would also help m identify their
core competences, which they could leverage across different group businesses. Clearly,
though, Pearson is facing corporate strategy problems.
Five-force analysis provides useful insights into the structure of a industry, but it
is more valuable to be able to look ahead, to predict how raise forces might change in
the future. What the analysis gives us is a 'snapshot" of the industry's structure at one
point in time; what we d is the injection of a dynamic element into the model.
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