Porter's Five Forces

Know the current and future strength of your competitive strategy

The Porter's Five Forces is a strategic tool used to determine, identify and analyse five competitive forces that shape business and related industry. It helps stakeholders understand the strength and vulnerability of current positioning and of future strategy.

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What is it about?

The Porter's Five Forces tool is used to determine, identify and analyse five competitive forces shaping business and related industry. The tool helps to increase strategic advantage over competing companies within an industry by determining the long-run profitability and vulnerability of key markets or market segments. The concerned five forces are:

  1. The power of suppliers
  2. The power of buyers
  3. The barriers to entry and/or exit
  4. The substitute products
  5. The overt/covert rivalry

Who is it for?

The Porter's Five Forces tool is often used by competitive strategists, C-level managers, and consultants to determine, define and assess the recent and future relevant industry forces and their structure; identify the participants and segment them into groups such as buyers and buyer groups, suppliers and supplier groups, competitors, substitutes, potential entrants. They further assess the underlying drivers and consistency of each competitive force to determine which forces are strong and which are weak and why. It is absolutely for stakeholders who aim to identify aspects of industry structure that might be influenced by competitors, new entrants, or by your company's action.

Who made it?

Michael E. Porter

Michael Porter is an economist, researcher, author, adviser, speaker and teacher. Throughout his career at Harvard Business School, he has brought economic theory and strategy concepts to bear on many of the most challenging problems facing corporations, economies and societies, including market competition and company strategy, economic development, the environment, and health care. His extensive research is widely recognized in governments, corporations, NGOs, and academic circles around the globe. His research has received numerous awards, and he is the most cited scholar today in economics and business. While Dr. Porter is, at the core, a scholar, his work has also achieved remarkable acceptance by practitioners across multiple fields. He described the five forces model in “How Competitive Forces Shape Strategy.”

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