Porter’s Four Corners Model

One of the primary factors that affect a company’s success is the competition. As we progress through the era of globalization and internationalization, markets are becoming more and more crowded with aggressive and dynamic market players. In order for a company to differentiate itself among this fierce business landscape, it must first be able to analyze the competition including any intents, objectives and overall competitive profile. In response to this challenge, Porter has proposed the Four Corners model which was designed for this exact reason – to evaluate competitive strategies and in turn assess how these affect your firm.

As the name implies, the model is divided into four sections:

1. Motivations – Drivers

The first step of the model is to examine and understand what the goals of your competition are. Here, you need to look into different levels and dimensions in order to identify the factors that drive your competitors. You first need to consider whether your competition is satisfied with where he is now or whether he is chasing new opportunities. You also need to look further into the company culture, the business philosophy and of course the organizational structure.

2. Motivation – Management Assumptions

In the next stage you need to understand how the competitor thinks about himself. At first glance this assumption will be subjective to personal bias. Yet, if you look into your competitor’s past actions in response to different events you can put together the pieces to the puzzle and form an idea of how your competitor perceives himself. Firms that feel threatened will usually chase aggressively any opportunities that may arise, while well-established firms are more likely to stay on-course.

3. Actions – Strategy

Here, you will need to dig into what the competitors are doing at the very current moment. This step should be fairly pretty straightforward and simple to assess. Make sure you look into different dimensions and operations so you form a holistic picture of the competitive strategy of your competitors. Some of the factors to consider are:

  • Price: What is the pricing strategy of your competitors? Is he offering a high quality product at a premium price or is he trying to gain competitive advantage on a cost leadership model?
  • Products: Is your competition launching any new products or does it have a well-established product portfolio that is rarely updated?
  • KPIs: How are competitors doing over KPIs? What about the share of market and the profitability?

4. Actions – Capabilities

The last factor examined in the model consist of the competitors capabilities. You need to think what your competition is good at in order to figure out their strong points. These are the areas that will probably focus on when they are in trouble. On the other hand, you need to also identify their weak points. By identifying their weak areas you can accordingly adjust your plans in order to offer customers what they competition does not.

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