Porter's five forces
Porter’s 5 Forces Analysis
= Suppliers, Customers, New
Entrants, Substitute Products,
Competitors
What is Porter’s 5 Forces Analysis?
Porter’s 5 forces analysis represents the competitive environment of the firm. It is a strategic foresight to avoid putting the competitive edge at risk and ensure the profitability of products on a long term. For the company this vision is quite important because the firm is able to direct its innovations in terms of choice of strategies and investments. The profitability of businesses within the industrial structure depends on the following forces:
Competitive rivalry within the industry;
Threats of new entrants;
Threats of substitutes products;
Bargaining power of customers;
Bargaining power of suppliers.
Golden Rules
6th force = Often the model is adjusted with a 6th force, the public authorities. This is important because the law and the norms can influence each of Porter’s 5 forces.
Key factors for success = The key success factors of the environment have to be identified. To have a competitive advantage some strategic elements should be controlled.
Threats of new entrants Public
Authorities
Bargaining power of suppliers Competitive rivalry within the industry Bargaining power of customers Threats of substitute products © Copyright 2008
LUXINNOVATION G.I.E.,
The National Agency for Innovation and Research in Luxembourg
1/2
Porter’s 5 Forces Analysis
= Suppliers, Customers, New
Entrants, Substitute Products,
Competitors
Structure of Porter’s 5 Forces Analysis
The competitive rivalry within the industry
The competition between firms determines the attractiveness of a sector. Companies are struggling to maintain their power. The competition changes based on sector development, diversity and the existence of barriers to enter. In addition it is an analysis of the number of competitors, products, brands, strengths and weaknesses, strategies, market shares, ….
The
= Suppliers, Customers, New
Entrants, Substitute Products,
Competitors
What is Porter’s 5 Forces Analysis?
Porter’s 5 forces analysis represents the competitive environment of the firm. It is a strategic foresight to avoid putting the competitive edge at risk and ensure the profitability of products on a long term. For the company this vision is quite important because the firm is able to direct its innovations in terms of choice of strategies and investments. The profitability of businesses within the industrial structure depends on the following forces:
Competitive rivalry within the industry;
Threats of new entrants;
Threats of substitutes products;
Bargaining power of customers;
Bargaining power of suppliers.
Golden Rules
6th force = Often the model is adjusted with a 6th force, the public authorities. This is important because the law and the norms can influence each of Porter’s 5 forces.
Key factors for success = The key success factors of the environment have to be identified. To have a competitive advantage some strategic elements should be controlled.
Threats of new entrants Public
Authorities
Bargaining power of suppliers Competitive rivalry within the industry Bargaining power of customers Threats of substitute products © Copyright 2008
LUXINNOVATION G.I.E.,
The National Agency for Innovation and Research in Luxembourg
1/2
Porter’s 5 Forces Analysis
= Suppliers, Customers, New
Entrants, Substitute Products,
Competitors
Structure of Porter’s 5 Forces Analysis
The competitive rivalry within the industry
The competition between firms determines the attractiveness of a sector. Companies are struggling to maintain their power. The competition changes based on sector development, diversity and the existence of barriers to enter. In addition it is an analysis of the number of competitors, products, brands, strengths and weaknesses, strategies, market shares, ….
The