Describe Porter's model

Question

Accepted Answer

Porter's model is a framework for analyzing the competitive forces in an industry.

Porter's model, also known as Porter's Five Forces, was developed by Michael Porter in 1979.
It helps identify the attractiveness and profitability of an industry by analyzing five competitive forces: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products or services, and intensity of competitive rivalry.
For example, in the airline industry, the threat of new entrants is low due to high barriers to entry such as high capital requirements and government regulations.
Another example is the bargaining power of buyers in the smartphone industry, where customers have a high level of power due to the availability of many alternative brands and products.
By understanding these forces, companies can develop strategies to gain a competitive advantage and improve their position in the market.

Accepted Answer

It is an attempt to analyze the level of competition within an industry and business strategy development. It is the economics to derive five forces that determine the competitive intensity and therefore attractiveness of an Industry. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. This analysis is associated with its principal innovator Michael E. Porter of Harvard University.

Describe Porter's model

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