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Business Research -- Industry Analysis

Porter's Five Competitive Forces

"The state of competition in an industry depends on five basic competitive forces...

  • rivalry among existing firms
  • threat of new entrants
  • threat of substitute products or services
  • bargaining power of buyers
  • bargaining power of suppliers

...All five competitive forces jointly determine the intensity of industry competition and profitability, and the strongest force or forces are governing and become crucial from the point of view of strategy formulation. For example, even a company with a very strong market position in an industry where potential entrants are no threat will earn low returns if it faces a superior, lower-cost substitute. Even with no substitutes and blocked entry, intense rivalry among existing competitors will limit potential returns. The extreme case of competitive intensity is the economist's perfectly competitive industry, where entry is free, existing firms have no bargaining power against suppliers and customers, and rivalry is unbridled because the numerous firms and products are all alike."

-- excerpt from pages 3-6, Competitive Strategy: Techniques for Analyzing Industries & Competitors.
Michael E. Porter. New York: The Free Press, 1998. General Collection HD 41 .P67 1998

"The Five Competitive Forces that Shape Strategy" by Michael E. Porter, Harvard Business Review, January 2008, Volume 86, Issue 1, p. 78-93.

"How Competitive Forces Shape Strategy" by Michael E. Porter, Harvard Business Review, March/April 1979, Volume 57, Issue 2, p. 137-145.

Search within online books for discussion of Porter's Five Forces by searching for the phrase with quotation marks "five forces" in ebrary and EBSCO eBooks

Porter's Five Forces: A Model for Industry Analysis (QuickMBA)

Other brief descriptions and Web resources about Porter's Five Forces


Source for ready-made analyses for specific industries using Porter's Five Forces:

  • Marketline Advantage (formerly Marketline Business Information Center, MBIC, and Datamonitor 360)

NOTE: There is not a ready-made Five Forces analysis available for every industry. If you can't find one, consider searching for a related industry and evaluate whether or not the same factors apply to the industry you're researching. Even for an industry with an existing Five Forces analysis, the researcher should consider expanding or updating the analysis. In locating related industries, also remember to look up and down the supply chain, e.g., the bargaining power of your industry may be identified as a buyer or supplier to another industry.