Porter’s 5 forces are therefore used to predict industry trends and changes in competition, and this information can help a company to make strategic decisions about the industry to gain/maintain status within it. It is also able to determine how changes within an industry can affect a given sector. Porter of Harvard Business School in the 1970s, Porter’s Five Forces sets out to answer questions such as: What’s going on out there in your industry? What deserves your attention? Of the many things that are happening, which ones matter for competition? It is able to determine how different parts of an industry interact in order to allow for profitability without changing the level of quality of the product or services provided by industry. These outline 5 forces that drive competition and threaten the company’s ability to make profits.Ĭreated by Michael E. Porter’s Five Forces is a framework used to analyze the balance of power within a particular industry and therefore, its overall profitability.
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