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Porter's Five Forces Analysis: Porter's Five Forces

Strategies and resources for creating a Five Forces Analysis

Porter's Five Forces Analysis is a micro-environment framework that attempts to analyze the level of competition within an industry. The Five Forces include – three forces from 'horizontal' competition: the threat of substitute products or services, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.

Porter on the Five Forces Model

The model is used to analyze the competitive environment in terms of five key forces that impact a company's profitability and influence its strategy. Professor Michael E. Porter set our his Five Forces model in articles published in the Harvard Business Review.

  • "The Five Competitive Forces That Shape Strategy." Harvard Business Review 86.1 (January 2008), 78-93.
  • "How Competitive Forces Shape Strategy." Harvard Business Review 57:2 (March/April 1979), 137-145

Porter on Competition & Strategy

Tools for Five Forces Analysis

Strategic Management Tools, Mind Tools and the Chartered Institute of Management Accountants (CIMA) offers guidance for many strategy tools, including Porter's Five Forces by offering definitions, summaries and step-by-step guides.