Porter’s Five Forces Model (developed by Michael E. Porter) is a strategic framework that analyses the competitive intensity and profitability of an industry by examining five key forces:
- Threat of New Entrants – How easily new competitors can enter the market (e.g., barriers like patents, capital requirements).
- Bargaining Power of Suppliers – Supplier control over prices/quality (e.g., few suppliers of lithium for batteries).
- Bargaining Power of Buyers – Customer ability to demand lower prices (e.g., bulk buyers like Walmart).
- Threat of Substitutes – Risk of alternative solutions (e.g., electric bikes replacing motorcycles).
- Industry Rivalry – Intensity of competition among existing firms (e.g., price wars in smartphone markets).