Established model
The five forces
Michael E. Porter · 1979
Profitability in an industry is set by five pressures, and rivals are only one of them.
Its place in the frameworkMarket Core›Competitors
What it does
The bargaining power of buyers and of suppliers, the threat of new entrants and of substitutes, and the intensity of rivalry. The reason it displaced simpler competitor analysis is its claim that the structure of an industry, not the skill of its participants, explains most of the difference in returns between industries — and that the force squeezing you is often not the company you think of as the competitor.
- Reach for it when
- When entering a market, when returns are falling across an industry rather than at one company, and whenever competitor analysis has become a list of rival firms.
- Where it stops
- It describes an industry at a moment and assumes reasonably clear boundaries. In markets where platforms make an industry a different shape every few years, the snapshot ages fast, and it has little to say about complementors or regulation.
Michael E. Porter, “How Competitive Forces Shape Strategy”, Harvard Business Review, 1979; Competitive Strategy, Free Press, 1980.
Why it sits at Competitors
Who else serves the same demand, what they can actually do, and where they are heading — read from evidence rather than from reputation.
A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:
- The competitor setLevitt on competition defined by the need served, and the substitution threat in Porter’s five forces.
- Capability comparisonThe resource-based view applied competitively: comparing capability rather than output.
- Reading their strategyPorter’s four-component competitor analysis: future goals, assumptions, current strategy and capabilities.
- MonitoringCompetitive-intelligence practice on indicator selection and the cost of undirected monitoring.
What it touches elsewhere
Nothing in a business is decided on its own. A conclusion reached with this model at Competitors lands in these other cores, whether or not anyone follows it there.
- Brand CorePositioning is argued against this set, and against the frame the customer actually uses.
- Business CoreCapability comparison is only interpretable against a clear reading of your own competences.
- Market OpportunitiesWhy nobody is serving an apparent opportunity is usually answered here.
- Data CoreMonitoring is a measurement programme and decays without an owner.
Filed at the same place
These answer questions that arise at Competitors too. Where they disagree with this one, the disagreement is the useful part.
- Strategic group mappingCompetitors cluster into groups following similar strategies, and the real rivalry happens inside a group.
- Blue Ocean StrategyStop competing on the factors an industry already competes on, and change which factors are on the table at all.
- Disruptive innovationThe competitor that displaces you usually starts by serving customers you were glad to lose.
Elsewhere in Market Core
These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.
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