Dominate Your Industry with Porter’s 5 Forces

Porter’s Five Forces is a framework developed by Michael E. Porter that helps analyze the competitive environment of an industry. It examines five key factors that affect the nature of competition within an industry:

  1. Threat of New Entrants: This force examines how easy or difficult it is for new competitors to enter the industry. Key questions include:
    • How high are the barriers to entry in the industry?
    • What is the level of regulation and how does it impact new entrants?
    • What is the level of brand loyalty and how does it affect new entrants?
  2. Bargaining Power of Suppliers: This force looks at the power suppliers have over businesses in the industry. Key questions include:
    • How concentrated are the suppliers, and how does this affect their bargaining power?
    • What are the substitution possibilities for the suppliers’ products?
    • How important is the industry to the suppliers?
  3. Bargaining Power of Buyers: This force explores the power that customers have in the market. Key questions include:
    • How price sensitive are the buyers in the industry?
    • How much bargaining power do the largest customers have?
    • Are there any substitute products available for buyers?
  4. Threat of Substitute Products or Services: This force examines the likelihood of customers finding a different way of doing what your business does. Key questions include:
    • How easy is it for customers to find substitute products or services?
    • How does the quality and price of substitutes compare to industry products?
    • Are there trends indicating an increase in the use of substitutes?
  5. Intensity of Rivalry Among Existing Competitors: This force looks at the degree of competition within the industry. Key questions include:
    • What is the number and capability of competitors in the industry?
    • How does the rate of industry growth affect competitive intensity?
    • What are the bases of competition (e.g., price, quality, innovation)?

By analyzing these five forces, businesses can gain a comprehensive understanding of their competitive environment, which is crucial for developing effective strategies.


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