Porter’s 5 Forces is a model used to analysis the competitive environment of a company. The model is focused on rivalry. Often this rivalry is specific to business selling very similar products e.g. Pepsi and Coke, Nike and Adidas, McDonalds and Burger King etc. However, Porter’s 5 Forces expands this to look at the threat of substitute products and how demand from consumers and availability of goods from suppliers affects the whole market.
A simple diagram of Porter’s Five Forces
Threat of New
Entrants to the
Supplier Power Consumer Demand
and Threats Rivalry and Changes in Habits