Porter's Five Forces Model
Introduction
Michael Porter's Five-Forces model is a powerful technique used in assessing the pressure and impact on the organisation due to external environmental factors such as competitors, suppliers and market conditions.
Porter grouped the pressures from the external environment into five key categories, also referred to as forces:
- Industry rivals - Extent of competition in the industry
- Potential entrants - Likelihood of threat from new entrants
- Suppliers - Bargaining power of suppliers
- Substitutes - Availability of substitute products/services
- Buyers - Bargaining power of buyers
This technique helps in understanding the impact and pressures on the organisation caused by the external factors.
Senior Management, Board of directors, Consultants, Analysts
External environmental factors such as suppliers, buyers, competitors often have a potential impact on the organisation's performance and outlook. The five forces framework enables us to look into these in detail.
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