The five forces are frequently used to measure competition intensity, attractiveness, and profitability of an industry or market. Porter’s five forces are: 1. Competition in the industry. 2. Potential of new entrants into the industry. 3. Power of suppliers.
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.