The Remarkable Advantages of Porter’s Five Forces


Porter’s five forces are used to understand the factors affecting a company’s market position. Learn how you can use that information to your advantage.

Porter’s five forces theory was developed a few decades ago, but it’s still one of the finest methods to scrutinize market competition and business attractiveness. These forces help to recognize where the flaws and power lie in the business operations. This not only focuses on a company’s strength but also provides sufficient information on where to expand it. You can learn more about its concept by reading Porter’s five forces of Ratios tell a story.

Various companies use this method to understand the forces affecting the company negatively. This helps them develop a plan to minimize the risk factors and prepare for whatever’s heading their way. When you have sufficient information on the weaknesses and strengths of a company, the decision-making and planning process becomes easy.

Benefits of Porter’s Five Forces

First of all, porter’s five forces model helps analyze critical factors that administer the competition. Every business gives them a different name, depending on their perspective and how they wish to analyze them. The forces are the intensity of rivalry, the threat of substitute products, the power of suppliers, the bargaining power of buyers, and the threat of new entrants in the market.

You do not need to have some special skills to understand the concept. You can ask the members of your team (preferably the marketers) to help you out fill the details in each section. The obtained information is then used as a guide to creating a marketing strategy, which is an important segment of a business plan. Keeping the company’s position in view, you can determine in which areas your business can expand.

Multiply Its Benefits By Integrating Other Tools

It can be easily combined with other analysis tools like PESTEL or SWOT to understand the internal and external factors better. These tools can provide specific information on macro-environmental forces and other approaching threats that you cannot foresee with Porter’s model. These tools can also help you analyze a company’s resources and how well every operation is being performed.

It begins from the manufacturing of a product to how it is delivered to the market. All the operations that take place in this process are defined comprehensively. If you see weakness in any of the involved steps, you can take action to improve it. So, these were the benefits you can attain by using Porter’s five forces model. If you wish to expand your business or move to a new market, using this framework can make the process easier by helping you search for the right place.