Porter’s 5 Forces is a business strategy and competitive analysis model that was developed by Michael E. Porter. It was designed to assess the level of competition within an industry and its profitability. There are five forces that can affect the level of competitiveness in any industry: threat of new entrants, threat of substitute products or services, bargaining power of customers, bargaining power of suppliers, and rivalry among existing competitors.
Porter’s five forces are used to understand the competitiveness of a market. The model helps in understanding what is the strength and weakness of each player in a market. It helps in identifying what are the possible threats and opportunities for the company. The five forces analysis includes: Threat of new entrants, Bargaining power of suppliers, Bargaining power of customers, Threat of substitutes, Competitive rivalry.