Continuing the previous post, I will give a brief description of 5 Porter’s Forces.

• Threat of Substitution: The goal of this topic is to measure the potential that consumers can replace a product/service for another product from another industry.

• Threat of New Entry: It means, how easy the market is for a new player approach, basically the more difficult is to a new competitor get in the market, the better for the company that is in this niche.

• Competitive Rivalry: It measure a product/service versus its existing direct competitors. Therefore, this point is important to understand the differentiation of this product/service in relation of its competitors.

• Buyer Power: The power that the consumer has to push the price down. If the customer has this power, the company has to adapt its price according to the consumer demand; it means low power of bargain for company.

• Suppliers Power: The power that the supplier has on the price. If a company has many options of suppliers for the same product, it gives the company the advantage of bargain in relation of its supplier.

I hope you enjoy this post, if it is not clear yet, click in the link of business-to-you.com explaining more with more details the 5 Porter’s Forces.

Porter’s Five Forces

Porter’s Five Forces

Porter’s Five Forces

Vinny.

Five Porter forces is a model developed by Michael Porter to analyze competitive factors of a specific industry. This model is applied to measure the potential profitability of the company through the following indicators:

• Threat of Substitution.
• Threat of New Entry.
• Competitive Rivarly.
• Buyer Power.
• Supplier Power.

I will explain each one in the following posts. Here is a very good example of Five Porter Forces analysis of Facebook made from forbes.com specialists.

https://www.forbes.com/sites/greatspeculations/2014/11/28/facebook-through-the-lens-of-porters-five-forces/#1cd4ca907dd3

Five Porter Forces is a very powerful tool. But, it is a good idea use it together with others tools such as SWOT and PEST analysis in that way one can complete each other. I will write about these different tools in the future.

Vinny.