Porter’s Five Forces is a tool used to analyze the competitiveness of a market by considering five factors: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitutes, and the intensity of competitive rivalry.
Competitive Strategy: Techniques for Analyzing Industries and Competitors – Michael E. Porter
Porter’s Five Forces
Goals
The main goal of using Porter’s Five Forces is to assess the strength and profitability of a market. The framework aims to help businesses understand the market dynamics and make informed decisions about entering or exiting a market, investing in product development, setting prices, and developing strategies for growth.
Best pratices
To get the most out of Porter’s Five Forces, it is important to consider each force in turn and to be as objective as possible in your analysis. Some best practices include:
Conducting a thorough market analysis to gather data on each of the five forces.
Analyzing the data in the context of the industry and the company’s current position.
Evaluating the impact of each force on the company’s profitability and growth potential.
Developing strategies to address the most pressing challenges and opportunities identified through the analysis.