Porter's Five Forces
A framework that judges an industry by five named forces to work out how hard the competition is, how attractive the market looks, and how much profit it can realistically yield.
The five forces are competitive rivalry among existing businesses, the threat of new entrants, the threat of substitute products, supplier power, and customer power. Strong forces cut an environment's attractiveness along with its potential profitability, and weak forces raise both.
Two threats, two powers, one rivalry: rivalry sits in the middle and is usually the strongest.
Often confused with
- SWOT Analysis
- Five Forces reads the market a business sits in; SWOT reads the business itself, using the Five Forces result as one of its external inputs.
Taught in
See also
4.4.A.1 · 4.4.A.2 · 4.4.B.1