Porter's Five Forces Analysis

Porter's Five Forces Framework is a tool for analyzing competition within an industry. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack of it) of an industry in terms of its profitability. An "unattractive" industry is one in which the effect of these five forces reduces overall profitability. The most unattractive industry would be one approaching "pure competition," in which available profits for all firms are driven to normal profit levels (Wikipedia).

  1. The threat of substitute products or services
  2. The threat of established rivals
  3. The threat of new entrants
  4. The bargaining power of suppliers
  5. The bargaining power of customers