Essays on Forces Model

Porter's Five Forces is a model that identifies and analyzes the competitive forces that shape every industry and market. This model is useful for identifying and understanding the sources of competitive advantage and for crafting strategies that will create and sustain it. The five forces are:1. Threat of new entrants: The threat of new entrants is the degree to which new firms can enter the market and compete with existing firms. When the threat of new entrants is high, existing firms are under pressure to keep prices low and invest heavily in order to stay ahead of the competition. When the threat of new entrants is low, existing firms can charge higher prices and enjoy higher profits.2. Threat of substitute products or services: The threat of substitute products or services is the degree to which consumers can turn to other products or services that meet their needs. When the threat of substitutes is high, firms must either offer lower prices or differentiate their products in order to stay competitive. When the threat of substitutes is low, firms can charge higher prices and enjoy higher profits.3. Bargaining power of suppliers: The bargaining power of suppliers is the degree to which suppliers can control the prices of their inputs. When the bargaining power of suppliers is high, firms must either accept the prices set by suppliers or find alternative suppliers. When the bargaining power of suppliers is low, firms can negotiate for lower prices and enjoy higher profits.4. Bargaining power of buyers: The bargaining power of buyers is the degree to which buyers can control the prices of the products they purchase. When the bargaining power of buyers is high, firms must either offer lower prices or find ways to convince buyers that their products are worth the price. When the bargaining power of buyers is low, firms can charge higher prices and enjoy higher profits.5. Threat of competitive rivalry: The threat of competitive rivalry is the degree to which firms in an industry are vying for market share. When the threat of competitive rivalry is high, firms must invest heavily in marketing and product development in order to stay ahead of the competition. When the threat of competitive rivalry is low, firms can charge higher prices and enjoy higher profits.