The Porter’s five forces analysis is a framework for the industry analysis and business strategy development. This focus on the microenvironment as opposed to the macro environment however has been seen to not be very beneficial in some respects. This can broadly be characterized to be making some important assumptions.
One is that buyers, competitors and suppliers are mutually exclusive and do not collude with each other. In the case of the automobile industry, this is a very dubious assumption to make; Manufacturers such asToyotaemploy Total Quality Management and Just-in-Time inventory management systems which require strong relations with the supplier. This leads to mutually beneficial agreements being drawn up along the vertical segments of the market that can lead to collusion between supplier and manufacturers.
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