Five Forces Analysis

Micheal E. Porter has made a significant contribution to competitive analysis by propounding the technique of ‘Five Forces Analysis’. It is a very exhaustive methodology available for carrying out the industry and competition analysis in depth and covers all aspects of business that would affect profitability of the company now and in the future. The technique has been illustrated in.



Micheal porter has identified the following five forces of competition for a firm. These include the following:

(i)    Rivalry among existing firms.
(ii)    Threat from new entrants.
(iii)    Threat form suppliers
(iv)    Threat from substitute products and service.
(v)    Threat from buyers.

A deep study of the above factors would help the firm in designing its competitive strategy. These five forces also determine the cost of operations. prices of end products, the investment and capacity to create and sustain entry barriers in the industry. A firm’s performance is determined by the competitive positioning it adopts in regard to competitors giving due weight age to the five forces.

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