The Five Forces Framework

The Five Forces Framework is a tool for analyzing the competitiveness of an industry. It examines five key factors: the threat of new entrants (how easily new competitors can join), bargaining power of suppliers (how much influence suppliers have on prices), bargaining power of buyers (how much customers can push for better prices or quality), threat of substitute products (risk of alternative products replacing existing ones), and industry rivalry (intensity of competition among existing competitors). Understanding these forces helps businesses identify opportunities and threats, guiding strategic decisions to improve their market position.