The Competitive Forces Model

The Competitive Forces Model, developed by Michael Porter, is a framework to analyze the competitiveness of an industry. It considers five key forces: the threat of new entrants (how easily others can start competing), bargaining power of suppliers (how much influence suppliers have), bargaining power of buyers (how much influence customers have), threat of substitute products (risk of alternative solutions), and industry rivalry (intensity of existing competition). Understanding these forces helps businesses identify strengths, weaknesses, and opportunities, enabling better strategic decisions to improve market position and profitability.