5-2 Michael Porter's Five Forces Model

Porter’s Five Forces

Michael Porter, a well-known business consultant and professor at Harvard University, identified five critical external factors that affect strategies being developed by organizations in any industry.

 This system, known as Porter’s Five Forces, has become an important management strategy tool. Managers use the tool to examine opportunities and threats and to facilitate decision making in the context of their company’s external environment. It measures the competitiveness of an industry and thus its attractiveness or potential profitability. An unattractive industry is one in which the combination of these five forces acts to drive down overall profitability.

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