Porter’s Five Forces Analysis
It is a great strategic framework innovated by Michael E. Porter of Harvard University to analyze the attractiveness and potential profitability of an industry. The five forces and their factors are
Potential of a new entrant into an Industry- Government policy, start-up cost, profitability, product differentiation, customer loyalty to other brands
The threat of Substitutes - availability, price, and quality of close substitute, buyer’s inclination towards substitute, etc.
Bargaining Power of Buyers- Buyer’s strength, price sensitivity, switching costs, concentration, etc.
Bargaining Power of Suppliers- Supplier’s density, controlling power, switching costs, the strength of distribution channel, etc.
Competition in the Industry- level of competition online or offline, advertising expenses, innovativeness, transparency, etc.