Porter’s 5 Forces


A model that identifies and analyses the key five competitive forces that shape all industries and which helps determine the strengths and weaknesses of an industry is called as Porter’s Five Forces. It is frequently used to identify the structure of an industry in order to determine corporate strategy. Porter’s model can be applied to any segment in an economy to search for attractiveness and profitability. This model is named after Michael E. Porter.
Porter’s model is used for business analysis and helps in explaining why the different industries are able to sustain the different profitability levels. It was published in Michael’s book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” published in the year 1980. This model is used widely to analyse the structure of an industry and a company regarding its corporate strategy.


He identified five undeniable forces that shape every market and industry on a global basis. These forces are measured frequently to understand competition intensity, attractiveness and also the profitability of a market or an industry as a whole.
The five forces as per Porter’s model includes:
1.       Competition in the industry and the ability to undercut a company.
2.       Potential of new entrants into an industry.
3.       The power of suppliers.
4.       Power of customers.
5.       Threat of substitutes


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