The Five-Forces model is an auxiliary measure for long-term corporate strategy planning and is intended to provide management with information on the most important forces of influence on its own enterprise.
Brief description
Unlike the SWOT analysis, the Five-Forces model looks at the five strongest powers that affect the company through the external environment. These parameters include:
The level of rivalry among existing firms in an industry
The threat of potential new entrants into an industry
The (bargaining) power of suppliers
The (bargaining) power of customers
The threat of substitute products
The model tries to create an estimate for the listed criteria and possibly proposals for actions and measures for the venture. The model was developed by Michael E. Porter and plays a significant role in the formulation of strategy in an enterprise.
