How to use Porter’s 5 Forces

What is Porter’s 5 Forces model? This model helps marketers and business managers to look at the ‘balance of power’ in a market between different types of organisations, and to analyse the attractiveness and potential profitability of an industry sector. It’s a strategic tool designed to give a global overview, rather than a detailed business analysis technique. It helps review the strengths of a market position, based on five key forces. Porter’s Five Forces works best when looking at an entire market sector, rather than your own business and a few competitors. How can I use Porters 5 Forces? To apply Porter’s Five Forces, you need to work through these questions for each area: Force 1: Threat of New Entry? Force 2: Buyer Power? Force 3: Threat of Substitution? Force 4: Supplier Power? Force 5: Competitive Rivalry?  Threat of New Entry If a new businesses can be easily started up in your sector without substantial investment then this is a threat. The Internet has made t


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