Porter Diagram

Definition

The Porter Diagram, developed by Michael E. Porter (Harvard Business School, 1979), is a framework for analyzing the competitive forces that shape every industry and determine its profitability.

It helps businesses assess their strategic position and identify potential threats or opportunities.

The 5 Forces

Competitive Rivalry
– Intensity of competition among existing firms

Threat of New Entrants
– Ease with which new competitors can enter the market

Bargaining Power of Suppliers
– Power of suppliers to drive up prices or limit supply

Bargaining Power of Buyers
– Ability of customers to demand lower prices or higher quality

Threat of Substitutes
– Risk of alternative products/services replacing yours