What are Porter’s Five Forces?
Michael Porter’s revolutionary five-force strategic analysis model, introduced in a seminal 1979 article in the Harvard Business Review, remains an indispensable tool for strategic analysts navigating the intricacies of industry competition. Designed to capture the complexity faced by real strategists while maintaining analytical manageability, Porter identified five pivotal forces shaping a given industry. Porter’s groundbreaking article challenged conventional business school curricula, which often depicted a perfectly competitive market devoid of influencing firms and equilibrium, a model misaligned with the complexities of the real business world.
Key Takeaways:
- Porter’s Five Forces model, introduced by Michael Porter in 1979, remains a crucial tool for analyzing industry competition and shaping strategic decisions.
- The model focuses on five pivotal forces: internal competition, potential new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitutes.
- The application of Porter’s Five Forces serves diverse purposes, including industry attractiveness evaluation, competitive position assessment, competitive advantage identification, and strategic move evaluation.
- A real-world example in the smartphone industry illustrates how these forces shape market dynamics for industry leaders like Samsung, Apple, and Huawei.
Table of Content
- Porter’s Five Forces
- Porter’s Five Forces Example
- Uses of Porter’s Five Forces
- Advantages of Porter’s Five Forces
- Disadvantages of Porter’s Five Forces
- How to Apply Porter’s Five Forces Analysis?
- Porter’s Five Forces – FAQs