Porters Five Forces

• Porter‘s Five Forces are:

  • Entry Threat (Barriers to entry)
  • Buyer Power
  • Supplier Power
  • Rivalry
  • Substitute threat
• Horizontal = threats from competitors
• Vertical = Threats from suppliers and customers
• Horizontal


  Threat of new entrants

  • Threat of substitute products
  • Intensity of competitive rivalry
• Vertical

  • Bargaining power of suppliers
  • Bargaining power of customers
• Entry Threat (Barriers to entry)

  When a new business enters an industry it is a threat to all existing businesses in that market. In a static market the new business will look to gain market share. This will clearly have to come from other businesses.
• Barriers to entry


  Barriers to entry are any factors that stop a firm from entering a market. Some markets will have high barriers to entry e.g. the cost of research and development in hi-tech industries.
• Barriers to entry includes:

  • High costs to enter the market
  • Economies of scale
  • Legal Barriers
  • Predatory Pricing
  • Government Regulation