Lesson 1, Topic 1
In Progress

Michael Porter’s Five Forces model

yousef 25/06/2024

These forces determine an industry structure and the level of competition in that industry. The stronger competitive forces in the industry are the less profitable it is. An industry with low barriers to enter, having few buyers and suppliers but many substitute products and competitors will be seen as very competitive and thus, not so attractive due to its low profitability.

Example of Porter's five forces. Force of barriers to enter is very weak, force of supplier power is weak, force of buyer power is strong, force of threat of substitutes is weak and force of competition is very strong.

It is every strategist’s job to evaluate company’s competitive position in the industry and to identify what strengths or weakness can be exploited to strengthen that position. The tool is very useful in formulating firm’s strategy as it reveals how powerful each of the five key forces is in a particular industry.