Porters Five Forces Model for Evaluating Industry Attractiveness. Porter’s Five Forces model is used to analyze the long-term attractiveness of an industry. Understanding the interaction of these forces with the existing competing organizations helps explain the differences in profitability amongst industries.
The originator of the five forces model is Michael Porter, a Harvard Business School (HBS) professor whose theories remain instrumental to business strategy even today. Porter’s five forces framework is utilized for strategic industry analysis, and focus on the following: Barriers to Entry – The difficulty in partaking in the industry as a seller.
The framework can be applied to any segment of the economy to assess potential profitability and general attractiveness. In fact, the framework provides an explanation why different industries are able to sustain different levels of profitability. The Five Forces of Porter Framework analyses five factors that shape every industry.