Framework

Five forces

The question it answers

Before entering or expanding in an industry, how can a business owner tell whether it can stay profitable over time, and which competitive forces squeeze margins most?

Origin
Porter, 1979; Porter, 2008; Porter, 1980
Diagram type
Hub diagram
Level of analysis
Industry
Topics
Strategy & leadershipBusiness consulting
Chess knight on a glass compass, icon for strategy and leadership

Diagram

Five forces

Industry attractiveness
Rivalry among existing competitors
Threat of new entrants
Threat of substitutes
Bargaining power of buyers
Bargaining power of suppliers

Pitfalls

Pitfall

Using one company's internal figures to 'prove' an industry force. The model describes industry structure, not one firm's performance.

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Porter, M.E. (1979) ‘How competitive forces shape strategy’, Harvard Business Review, 57(2), pp. 137–145.No DOIhbr.orgCited in 1 article
  2. Porter, M.E. (1980) Competitive strategy: techniques for analyzing industries and competitors. New York: Free Press.No DOICited in 1 article
  3. Porter, M.E. (2008) ‘The five competitive forces that shape strategy’, Harvard Business Review, 86(1), pp. 78–93.No DOIhbr.orgCited in 1 article