Competitive Decision Making With Porter’s Five Forces

The goal of every business is to increase and retain profits while surpassing the competition. When it comes to strategic planning, knowing who the competition is and understanding how their actions will affect the business is critical to long-term success. One way to analyze your competition is by using Porter’s Five Forces model to break them down into five distinct categories, designed to reveal insights. Originally developed by Harvard Business School’s Michael E. Porter in 1979, the five forces model looks at five specific factors that determine if a business can be profitable, based on other businesses in the industry. Understanding the competitive forces, and their underlying causes, reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition (and profitability) over time.

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