June 2013 – May the (Half) Force Be With You

May the (Half) Force Be With You

Michael Porter’s Five Forces model just got half-a-force better. From Wikipedia: “Porter’s Five Forces analysis is a framework for industry analysis and business strategy development (that identifies) five forces that determine the competitive intensity and therefore attractiveness of a market.” These Five Forces need to be considered when conducting a SWOT analysis.

Dan McGinn of HBR makes a strong case that one should actually consider an additional “half” factor/force in his blog entry entitled “Michael Porter’s Five (and a Half) Forces”. The additional “half” force is government (policy, regulations, etc.).

Today, we are witnessing two interesting examples of companies/industries where the Half Force is impacting market attractiveness:

  1. Craft Beer: a $2 per barrel reduction in the federal excise tax on beer; and the legalization of home-brewing (click here to read more). The result of these combined forces stimulated the industry to grow from fewer than 50 breweries in 1976 to more than 2,300 today.
  2. Automotive: E-car maker Tesla is fighting state and federal laws so they can skip dealerships and sell directly to consumers (click here for more details).

So, may the Half-Force be with you (craft beer), and not against you (Tesla).

As always, we welcome your ideas and comments.