Porter five forces model is basically a framework for industry analysis. It helps in business strategy development. It was presented by Micheal Porter. According to this framework, there are 5 forces that determine the competitiveness of a market and its attractiveness and profitability. These forces are:
- Threat of substitute products
- Bargaining power of buyers
- Bargaining power of sellers
- Threat of new entrants
- Competitive rivalry within an industry.
Any industry can be taken as an example of this model. Take for example, the Pakistani Textile industry. The threat of substitutes is high, the bargaining power of buyers is high, the bargaining power of seller is low because there are many of them, the threat of new entrants is high because it is easy to set up a textile mill. So the competitive rivalry in the industry is high because the set up cost is low and there are a number of substitutes available to the customers.
