Editing Porter's five forces analysis (section)

== Factors, not forces ==
Other factors below should also be considered as they can contribute in evaluating a firm's strategic position. These factors can commonly be mistaken for being the underlying structure of the firm; however, the underlying structure consists of the five factors above.<ref name=":0">{{Citation|last=Porter|first=Michael E.|title=How Competitive Forces Shape Strategy|date=1989|url=http://dx.doi.org/10.1007/978-1-349-20317-8_10|work=Readings in Strategic Management|pages=133–143|place=London|publisher=Macmillan Education UK|doi=10.1007/978-1-349-20317-8_10|isbn=978-0-333-51809-0|access-date=2020-11-08|url-access=subscription}}</ref>

=== Industry growth rate ===
Sometimes bad strategy decisions can be made when a narrow focus is kept on the growth rate of an industry.<ref name=":1" /> While rapid growth in an industry can seem attractive, it can also attract new entrants especially if entry barriers are low and suppliers are powerful.<ref name=":0" /> Furthermore, profitability is not guaranteed if powerful substitutes become available to the customers.

For example, Blockbuster dominated the rental market throughout 1990s. In 1998, [[Reed Hastings]] founded [[Netflix]] and entered the market. Netflix's CEO was famously laughed out of the room.<ref>{{Cite news|last=Levin|first=Sam|date=2019-09-14|title=Netflix co-founder: 'Blockbuster laughed at us … Now there's one left'|language=en-GB|work=The Guardian|url=https://www.theguardian.com/media/2019/sep/14/netflix-marc-randolph-founder-blockbuster|access-date=2020-11-08|issn=0261-3077}}</ref> While Blockbuster was thriving and expanding rapidly, its key pitfall was ignoring its competitors and focusing on its growth in the industry.

=== Technology and innovation ===
Technology in itself is a rapidly growing industry. Regardless of the advanced growth, it presents its limitations; such as customers not being able to physically touch/test products. Technology stand alone cannot always provide a desirable experience for a customer. "Boring" companies that are in high entry barrier industries with high switching costs and price-sensitive buyers can be more profitable than "tech savvy" companies.<ref name=":3">{{Citation|title=International Strategy|url=http://dx.doi.org/10.1017/9781108572507.013|work=The Art of Strategy|year=2018|pages=229–251|publisher=Cambridge University Press|doi=10.1017/9781108572507.013|isbn=978-1-108-57250-7|s2cid=241673316 |access-date=2020-11-08|url-access=subscription}}</ref>

For example, quite commonly websites with menus and online booking options attract customers to a restaurant. But the restaurant experience cannot be delivered online with the use of technology. Food delivery companies like Uber Eats can deliver food to customers but cannot replace the restaurant's atmospheric experience.

=== Government ===
Government cannot be a standalone force as it is a factor that can affect the firms structure of five forces above.<ref name=":2" /> It is neither good or bad for the industry's profitability.<ref name=":0" />

For instance,

* patents can raise barriers to entry 
* supplier power can be raised by union favoritism from government policies <ref name=":0" />
* failing companies reorganizing due to bankruptcy laws<ref name=":0" />

=== Complementary products and services ===
Similar to the government above, complementary products/services cannot be a standalone factor because it's not necessarily bad or good for the industry's profitability.<ref name=":0" /> Complements occur when a customer benefits from multiple products combined. Individually those standalone products can be redundant. For example, a car would be unusable without petrol/gas and a driver. Or for example, a computer is best used with computer software.<ref name=":3" /> This factor is controversial (as discussed below in Criticisms) as many believe it to be 6th Force. However, complements influence the forces more than they form the underlying structure of the market.

For instance, complements can

* influence barriers of entry by either lowering or raising it e.g. Apple providing set of tools to develop apps, lowers barriers to entry; 
* make substitution easier e.g. Spotify replacing CDs

A strategy consultant's job is to identify complements and apply them to the forces above.<ref name=":0" />