THE ROLE OF PORTER’S FIVE FORCES MODEL IN TODAY’S BUSINESS WORLD

Abstract

This article critically evaluates the relevance of the Five Forces Model developed by Michael E. Porter in the contemporary business environment. As one of the cornerstones of the strategic management literature, the model aims to guide firms by analyzing industry structure through five key competitive forces. However, over the past four decades, developments such as the rise of the knowledge economy, digitalization, globalization, the acceleration of innovation, strategic partnerships, and the blurring of industry boundaries have challenged the model’s relatively static and deterministic assumptions. After outlining the strengths of the Five Forces Model, the study discusses its limitations under current conditions, focusing on its lack of flexibility in the face of rapid change, its limited attention to firm-level resources, its tendency to overlook collaborative networks, its assumption of fixed industry boundaries, and its insensitivity to global and contextual differences. Based on a critical review of the literature, the article also emphasizes that contemporary firms should combine Porter’s framework with resource-based perspectives, dynamic capabilities, and network-based strategy approaches when conducting competitive analysis. Accordingly, the paper argues that while the Five Forces Model still provides a valuable analytical lens, it is not sufficient on its own; therefore, modern strategic analyses should be supported by more flexible and multidimensional approaches.