01 Porter's
Five Forces
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The Five Forces of Industry Structure (Michael Porter, 1980) is the most famous diagram in strategic consulting; I use it to get a grip on a sector's hopes and fears. It lets you find the 'edges of the jigsaw' - the limits within which you have to work.
Thinking about your industry as a combination of power, entry, and rivalry shows you the limits of your opportunity to add value or increase margin. The opposing forces of supplier power (a few monopoly sources, or a plethora vying for your custom?) and buyer power driven by consumer power (do your customers have a lot of choice, or always go on price?) interact with the the threat from competing firms or competing products in the market (are the barriers to entry high in your industry, or the alternatives to its products limited?)
Porter's Five Forces are the things you can't do much about: the macroeconomic drivers acting across your whole sector. But understanding them offers a useful view of your business landscape. Next comes 02: ESTEMPLE analysis.
Back to toolbox
The Five Forces of Industry Structure (Michael Porter, 1980) is the most famous diagram in strategic consulting; I use it to get a grip on a sector's hopes and fears. It lets you find the 'edges of the jigsaw' - the limits within which you have to work.
Thinking about your industry as a combination of power, entry, and rivalry shows you the limits of your opportunity to add value or increase margin. The opposing forces of supplier power (a few monopoly sources, or a plethora vying for your custom?) and buyer power driven by consumer power (do your customers have a lot of choice, or always go on price?) interact with the the threat from competing firms or competing products in the market (are the barriers to entry high in your industry, or the alternatives to its products limited?)
Porter's Five Forces are the things you can't do much about: the macroeconomic drivers acting across your whole sector. But understanding them offers a useful view of your business landscape. Next comes 02: ESTEMPLE analysis.