Porter’s 5 Forces and Strategy for media startups

Posted on 03. May, 2011 by in Business Fundamentals

Michael Porter has published extensively about corporate strategy, explicating the 5 Forces framework for analyzing suppliers, buyers, competitors, substitutes, and new entrants.  For a media startup, this level of strategic thinking is important for market research and analysis, in order to identify opportunities for adding and capturing value.

However, strategic think has to be realized by nimble execution and needs to evolve as market conditions and customer behavior change, which is likely in today’s dynamic media landscape.  For instance, when Apple launched the iPad, tech and media companies had to redraw their 5 forces diagram.  But it is anyone’s guess how much impact the iPad will have in the short, medium, and long run.  Depending on iPad sales over time at different price points, a company can over-invest or under-invest in providing iPad services.

Porter says that a company needs a strategy, or a story that ties together all it’s activities.  It needs to focus on providing the best and most innovative solutions.  Management needs to steer to ship in a clear direction.  But they have to make adjustments.  The danger is that need for major strategic shift(s) are difficult to recognize, and the marching orders are tough to execute: innovator’s dilemma.

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