Frameworks
Porter's Five Forces
Five pressures that shape how profitable an industry is.
Last reviewedWhat does Porter's Five Forces mean?
Michael Porter's Five Forces (first published in 1979) describe what drives the long-run profitability of an industry: rivalry among existing competitors, the bargaining power of buyers, the bargaining power of suppliers, the threat of new entrants, and the threat of substitutes. It describes the industry, not one firm, and is a snapshot, so add how the forces are changing.
Where does it come up in case interview prep?
Related terms
- Barriers to entryWhat makes it hard for new competitors to enter a market.
- Competitive advantageWhat lets a firm earn more than its rivals over time.
- FrameworkA reusable way to break down a common kind of problem.
- Porter's generic strategiesCompete on lowest cost, on being different, or by focusing on a niche.
- BCG growth-share matrixSorting businesses by market growth and relative market share.
- Ansoff matrixFour growth routes: existing or new products in existing or new markets.
- McKinsey 7S frameworkSeven parts of an organization that must fit together.
- SWOT analysisStrengths, weaknesses, opportunities and threats.