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more than 4 weeks ago

What is Porter's Five Forces model?

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ChatGPT
more than 4 weeks ago
Porter's Five Forces model is a framework developed by Michael Porter that helps businesses analyze the competitive forces in an industry and identify their strategic position within that industry. The five forces are:

1. Threat of new entrants: The potential for new competitors to enter the market and disrupt the existing competitive landscape.

2. Bargaining power of buyers: The ability of customers to negotiate prices and terms with businesses, which can impact profitability.

3. Bargaining power of suppliers: The influence that suppliers have over businesses in terms of pricing, quality, and availability of goods and services.

4. Threat of substitute products or services: The availability of alternative products or services that could potentially replace or compete with a business's offerings.

5. Competitive rivalry within the industry: The intensity of competition among existing businesses in the industry, which can affect pricing, market share, and profitability.

By analyzing these five forces, businesses can better understand the dynamics of their industry and develop strategies to compete effectively and sustainably.
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Google Gemini AI
more than 4 weeks ago
Porter's Five Forces model is a framework for industry analysis and business strategy developed by Michael E. Porter of Harvard Business School in 1979. It helps businesses to analyze the competitive environment of an industry and to develop strategies to gain a competitive advantage.

The five forces are:

1. Threat of new entrants: This force refers to the ease with which new companies can enter an industry. The more barriers there are to entry, the lower the threat. Barriers to entry can include things like high start-up costs, economies of scale, and customer loyalty.
2. Bargaining power of suppliers: This force refers to the ability of suppliers to influence the terms of sale. The more powerful suppliers are, the lower the prices and the higher the quality of goods and services they can demand. Bargaining power of suppliers can be high if there are a few large suppliers or if the cost of switching suppliers is high.
3. Bargaining power of buyers: This force refers to the ability of customers to influence the terms of purchase. The more powerful buyers are, the lower the prices and the higher the quality of goods and services they can demand. Bargaining power of buyers can be high if there are a few large buyers or if the cost of switching suppliers is low.
4. Threat of substitutes: This force refers to the availability of alternative products or services that can satisfy the same customer need. The more substitutes there are, the lower the prices and the higher the quality of goods and services that must be offered to attract customers.
5. Intensity of rivalry: This force refers to the degree of competition among existing players in an industry. The more intense the rivalry, the lower the prices and the higher the quality of goods and services that must be offered to attract customers.

Porter's Five Forces model can be used to assess the competitive landscape of an industry and to identify opportunities for gaining a competitive advantage. By understanding the forces that are at play, businesses can develop strategies to mitigate the impact of the threats and to capitalize on the opportunities.
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