2.2.1 What is Porter's Model of Five Forces?

Porter´s Five Forces model is an analysis tool which focuses on 5 competitive forces in an industry. Porter´s model of Five Forces enables you to analyze the competitive position of your company in the sector in which it operates.

The five forces are:

  • Threat of new entrants
  • Bargaining power of buyers
  • Threat of substitute products or services
  • Bargaining power of suppliers
  • Rivalry among existing firms

The following diagram depicts the interaction between Porter´s Five Forces:

Figure 2: Porter's Five Forces

Section 2.2.4 will provide an overview on how these elements are analyzed, with regards to Porter´s model.