Porter's Five Forces Model

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Evolution of Porter 's Five Forces Model Five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. Michael Porter is a professor at Harvard Business School andis a leading authority on competitive strategy and international competitiveness.Michael Porter was born in Ann Arbor, Michigan. Five forces uses concepts developing, Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A…show more content…
Force 5: Bargaining power of suppliers This relates to what your suppliers can do in relationship with you. * How strong is the position of sellers? * Are there many or only few potential suppliers? * Is there a monopoly? * Do you take inputs from a single supplier or from a group? (concentration) * How much do you take from each of your suppliers? * Can you easily switch from one supplier to another one? (switching costs) * If you switch to another supplier, will it affect the cost and differentiation of your product? * Are there other suppliers with the same inputs available? (substitute inputs) Need for Porter 's five forces Model In general, any CEO or a strategic business manager is trying to steer his or her business in a direction where the businesswill develop an edge over rival firms. Michael Porter 's model of Five Forcescan be used to better understand the industry context in which the firm operates. Porter 's Five Forces model is a strategy tool that is used to analyze attractiveness of an industry structure. Porter 's Five Forces modelviews

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