[MUSIC] Organizations exist in arenas which are competitive in that they, to state the obvious, to a lesser or greater degree, face competition. This applies to all types of organizations, but is especially the case for commercial organizations. It makes sense to examine and analyze the nature and scope of competition in the industry or sector in which an organization is situated. And once the analysis is complete, and findings available, the question arises of what to do about matters. Of course, as ever, all of this is easier said than done. However, there are two helpful models, two analytical tools, which have proved really useful to organizations as they seek to do all of that. Both were developed by Michael Porter. One is referred to as Porter's 5 Forces, and the other as Porter's generic strategies for competitive advantage. The 5 Forces Model identifies 5 forces driving competition. The state of competitive rivalry between existing and potential competitors in an industry or sector, the threat of new entrants, the threat of substitute products or services, the bargaining power of buyers and the bargaining power of suppliers. If any of the last four change in any way, the state of competitive rivalry is also likely to be impacted upon and changed. The impact of globalization has been to heighten competition in many sectors. Technology, with its ability to cross borders, has generated different states of competition in many areas. The banking sector, social media, call centers, support activities, even sport has been revolutionized. For example, US based and UAE based organizations now own Premier League football clubs in England. And countries, such as China, are able to lure established football players away from European clubs with the promise of both high financial rewards and a prospect of breaking new boundaries in a new environment. The EU and the USA introduced an open skies policy in 2008 designed to open up the air travel market between the USA and Europe to easier entry, and thus, at least in theory, to introduce the possibility of competition. International activities have also helped in diversifying risk, spreading those risks more widely. Improved supply chains, and more demanding customers, especially in the context of price, have also changed the competitive state of play. For example, for those who drink alcohol, champagne has traditionally being viewed as the drink of choice. Sparkling wine has started to overtake champagne sales, changing the state of competitive rivalry. Many governments have sought to open up traditionally monopolistic industries, water, electricity, gas, telecommunications to competition through privatization, leading to a very new set of dynamics. To operate successfully in an industry or sector awash with competition, organizations should identify, adopt and implement a relevant and appropriate competitive strategy. Porter suggests that the strategy adopted is the outcome of an analysis, looking at whether competition should be based on cost or added value, and whether a mass market or a niche market is the focus. The analysis will, according to Porter, lead to the adoption of a strategy based on cost leadership, differentiation, cost focus or differentiation focus. First, we explore the nature and application of the 5 Forces Model. [MUSIC]