Professor Michael Porter of Harvard Business School has developed a framework that helps in developing an organization's competitive advantage. Porter identified five fundamental forces acting on the organization; I. The bargaining power of suppliers; II. The bargaining power of buyers; III. The threat of potential new entrants;IV. The threat of substitutes;V. The extent of competitive rivalry. The bargaining power of suppliers. Suppliers can exercise bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods or services. In every industry there are suppliers; Porter put forward the idea that suppliers are more powerful under the following conditions: “If it is dominated by a few companies and is more concentrated than the industry it sells to. This means that it is difficult to change suppliers if they start to exert power.”« It is not forced to compete with other substitute products to sell to the industry. This is the case if the supplier's role is technical and no other supplier can offer this product/service.”« Industry is not a major customer of the supplier group. If the industry to which the supplier sells does not represent a large percentage of its sales, then it may exert power. ""The supplier's product is an important input to the buyer's business. The supplier's product is essential to the buyer, so he can charge whatever price he wants and the buyer will pay because the product is essential. The bargaining power of buyers. Buyers compete with the industry by lowering prices and bargaining for higher quality or more services and pitting competitors against each other. Porter puts forward...... middle of paper ......1. It is assumed that the organization's own interests come first; it doesn't take into account charities or government bodies, where other people's needs come first. (Lynch 2006)2. The model assumes relatively static market structures. The competitive environment of an industry is constantly evolving. (Lynch 2006)3. In economic terms, the model assumes a classical perfect market. The more regulated an industry is, the less meaningful information the model can provide.4. It only looks at the macro environment of an organization and does not attempt to investigate the micro environment.5. It is said to be dated; When the model was created in the 1980s, the US economy was experiencing cyclical growth, the primary objectives being profitability and survival. Development in most sectors has been quite stable and predictable, compared to today's dynamics.