An IT perspective on a business model's (concept, capabilities and value) relationship with Porter's Industry structure model.

How does a business model relate to the industry structure model (Porter's ICA model)? Evaluate their utility for the management of IT at the senior management level. What utility would understanding these models and their relationships have for a beginning IT manager?

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...ition in the market may involve low prices or product differentiation.

5) The concept may also include provisions for eliminating the competition by attracting a large and loyal community. This can again be done through low prices or product differentiation.

As is evident by this discussion the 'concept' depends on Porter's industry structure model to a large extent.

Organization's 'capabilities' include the resources needed to execute the strategy. One important factor that affects the capability of a company is the capabilities of its partners (customers and suppliers), which relate directly to the two external entities in Porters model. Other capabilities are primarily intrinsic to the firm and so are not demonstrated in Porter's model (which corresponds to the entire industry and not a specific company). The corporation should ensure that the bargaining power of the customers as well as suppliers is well within control. Factors affecting the bargaining power of the customers are pull-through from substitute products, buyer information and low switching costs. Factors affecting the bargaining power of suppliers include presence of substitute inputs and importance of volume to supplier. Porter's model gives a number of other factors that affect their bargaining power.

Lastly, the business model should be able to create 'value' for both the external entities mentioned before - Customers and Suppliers. The business model emphasizes on creating value for all the possible stakeholders. The customers and the suppliers are two very important stakeholders.

1) Value can be created for ...