Competitive Forces Model

The Competitive Forces Model, developed by Michael Porter, helps explain why industries are profitable or not by examining five key factors. These include the threat of new competitors entering the market, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of rivalry among existing competitors. Together, these forces influence how companies strategize to gain a competitive advantage, either by capitalizing on opportunities or defending against threats within their industry environment.