Analysis of the Competitive Environment of Tourist Destinations Aiming at Attracting FDI by Applying Porter’s Five Forces Model

Abstract

Aims: The aim of this article is to come to the conclusion whether Porter’s five forces model can be adjusted for the purpose of assessing competitive environment of the tourist destination, in order to attract Tourism Foreign Direct Investments (TFDI), and use it as such as an alternative method for comprehension and enhancement of competitive advantage. Study design:  Research paper. Methodology: The research relies on the well-known Porter’s five forces, which the author adjusted and applied on local tourism destination. It was tested whether in this way opportunities and threats for the development of tourism in the local destination could be found, and the possibility of strengthening its position in relation to the five forces, in order to enhance the competitive advantage of a destination, for the purpose of defining strategies for attracting TFDI. Results: By applying the adjusted Porter’s five forces on the example of Divcibare in Serbia, opportunities that allow the development of tourism products in line with world trends were recognized, the necessity of improving the quality of accommodation and services and the need for greater administrative and procedural efficiency of local self-government were pointed out, as well as trends and volume of FDI outflows that needs to follow in finding potential investors. Conclusion: The research has shown that by applying the adopted Porter’s five forces, tourist destinations are given an opportunity to see their position in the domestic market, compared to their competitors, consider the extent and trend of investment flows in the world and the trends in the global tourism market and develop their services and contents in accordance with them. Tourist destinations can also realize the opportunities that are offered to investors in other countries and compare and consider that await investors in making investment decisions in their country and local tourist destination.