Porter’s Five Forces Model
Michael Porter’s Five Forces is a framework for analysing the competitive forces that shape every industry. It helps organisations understand the intensity of competition and the profitability potential of a market.
The five forces are:
- Threat of new entrants — How easy is it for new competitors to enter the market?
- Bargaining power of suppliers — How much power do suppliers have over pricing and terms?
- Bargaining power of buyers — How much power do customers have to drive prices down?
- Threat of substitute products or services — How likely are customers to switch to alternatives?
- Rivalry among existing competitors — How intense is competition between current market players?
Porter’s Five Forces Diagram
Download the free Porter’s Five Forces diagram:
Using the Model
Organisations use Porter’s Five Forces to:
- Assess the attractiveness of an industry before entering it
- Understand the dynamics that affect profitability
- Develop strategies to improve competitive position
- Identify opportunities and threats in the external environment
The model is often used alongside SWOT analysis to build a comprehensive strategic picture.