What is Porter five forces model?

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What is Porter’s five forces model?

The art of understanding what competition means …

In this article you will learn about:

  • What is Porter’s Five Forces Model used for?
  • What is Porter’s five forces model?
  • How Porter’s five forces model helps in micro environmental analysis?

What is Porter Five Forces Model used for?

Porter Five Forces model is a model that helps you to understand the structure of industry (that you will enter in) and make a position that will get you more profitability and less vulnerability to be attacked.

What is Porter five forces model?

                                                                                                                         Porter, 1986 &2008

Porter Five Forces are the five critical factors that could force your business to the extremes; Porter Five Forces are focusing on Five Issues:

  1. The Competition in the same industry: Rivalry among Existing Competitors.
  2. Buyers: Bargaining Power of Buyers.
  3. Suppliers: Bargaining Power of Suppliers.
  4. Entrants to your industry: Threat of Entrants.
  5. Substitutes to your products or services: Threat of Substitute.

How Porter five forces model helps in micro environmental analysis?

Porter’s five forces model is the cornerstone of understanding what competition means in micro environmental analysis (internal environmental analysis or internal audit). You need to understand each force of Porter’s five forces model because this will help you to develop effective marketing strategies for your marketing plan.

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  • Mohamed Shaaban

    Thanks Magdy for your great article

    suppose I want to open my private clinic/Pharmacy below is how can I apply your information ? and please correct me if I’m wrong:

    Porter Five Forces are focusing on Five Issues:

    The Competition in the same industry: other pharmacies/ clinics around mine as an Existing Competitors.

    Buyers: purchasing power of the people who live around my pharmacy or clinic (Power of Buyers)

    Suppliers: Power of Suppliers for my pharmacy are the drug suppliers but for my clinic ( should what ? raw materials agencies ? or what ?)

    Entrants to your industry: the probability to open a new pharmacy or clinic and how can I be ready (Threat of Entrants.)

    Substitutes to your products or services: existing competitor ? or (Threat of Substitute) what’s the difference when it comes to a private project ?

    thanks Magdy for your guidnace