What is the five-force model?

The Five Forces Model was put forward by Michael Porter in the early 1980s, which had a far-reaching global impact on enterprise strategy formulation. Used in competitive strategy analysis can effectively analyze the competitive environment of customers.

These five forces are: the bargaining power of suppliers, the bargaining power of buyers, the entry ability of potential competitors, the substitution ability of substitutes and the current competitiveness of competitors in the industry.

The five-force model brings together a large number of different factors in a simple model to analyze the basic competitive situation of an industry. The five power models identify five main sources of competition, namely, the bargaining power of suppliers and buyers, the threat of potential entrants, the threat of substitutes, and finally the competition between companies in the same industry.

The proposal of feasible strategy should first include the confirmation and evaluation of these five forces. Different industries and companies have different characteristics and importance of different forces, as shown in the following figure:

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Editor | Shane? gadfly