Sunday, May 5, 2019
TOPIC NO 9 Essay Example | Topics and Well Written Essays - 2750 words
publication NO 9 - Essay ExampleFactors such as culture and history are not included in the Porters five forces industry analysis. Because of this, the model is seen as inadequate as an environmental assessment tool. Moreover, the forces behind the model are grounded on the premise of constant returns to scale by Alfred Marshall in his possible action of production. This paper aims to discuss the changes, such as increasing returns to scale and their picture on the intensity of the forces. Factors such as culture and history and their effect on the forces are alike explored.When constant returns to scale is a vital premise where Michael Porter has derived his Five Forces of the industry model, it mainly found on Alfred Marshalls theory of production. According to Marshalls theory of production, for a indisputable increase in the level of all inputs, the output will increase by the same property (ILSTU.edu 2009). This has been identified as the constant returns to scale.The con cept of constant returns to scale has been the traditional assumption as regards the theory of production. However, changes in our times state that the concept of constant returns to scale is not always the case for production. As firms strain to build production competitive advantage in order to lead the competition, they strive to ready more outputs for a given increase in the level of the inputs, hence increasing returns to scale. As declared in Porters five forcesIn the traditional economic model, competition among rival firms drives profit to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are raise in these differences (AUEB.gr). unique industry characteristics that define the industry.