Porter's five forces
Porter's five forces: a coffee cart in the CBD
Threat of new entrants
Supplier power
Rivalry between competitors
Buyer power
Threat of substitutes
Three cafés within 200 m
A price war on flat whites
Cart permits are cheap
Easy to copy a menu
Few specialty roasters nearby
Two suppliers set milk prices
Office workers can walk to four options
Loyalty apps everywhere
Pod machines in offices
Energy drinks
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What Porter's five forces are
“Porter's Five Forces Framework is a method of analysing the competitive environment of a business.”
When to use Porter's five forces
Strategy
Look at the five pressures on a business: rivals, newcomers, suppliers, buyers and substitutes.
A startup
Check whether a market is worth entering, like a coffee cart near three cafés.
Studying
A standard in business studies, with the rivalry in the middle.
How to make a Porter's five forces analysis
- 1Rivalry in the middlePorter's five forces: a coffee cart in the CBDThreat of new entrantsSupplier powerRivalry between competitorsBuyer powerThreat of substitutes
- 2Four forces round itPorter's five forces: a coffee cart in the CBDThreat of new entrantsSupplier powerRivalry between competitorsBuyer powerThreat of substitutesThree cafés within 200 mA price war on flat whites
- 3What each one meansPorter's five forces: a coffee cart in the CBDThreat of new entrantsSupplier powerRivalry between competitorsBuyer powerThreat of substitutesThree cafés within 200 mA price war on flat whitesCart permits are cheapEasy to copy a menuFew specialty roasters nearbyTwo suppliers set milk pricesOffice workers can walk to four optionsLoyalty apps everywherePod machines in officesEnergy drinks
Helpful resources
Questions
- Who came up with it?
The five-forces perspective is associated with its originator, Michael E. Porter of Harvard Business School.
From Wikipedia — Porter's five forces analysis — CC BY-SA 4.0- Why did Porter make it?
Porter developed his Five Forces Framework in response to the then-prevalent SWOT analysis, which he criticized for its lack of analytical rigor and its ad hoc application.
From Wikipedia — Porter's five forces analysis — CC BY-SA 4.0- Do I need an account?
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