Five forces are the competitiveness of existing competitors in the same industry, the entry ability of potential competitors, the substitution ability of substitutes, the bargaining power of suppliers and the bargaining power of buyers.
1, bargaining power of suppliers
Suppliers mainly affect the profitability and product competitiveness of existing enterprises in the industry through their ability to increase the price of input factors and reduce the quality of unit value.
2. The bargaining power of the buyer
Buyers mainly affect the profitability of existing enterprises in the industry by lowering prices and demanding higher quality products or services.
3, the threat of new entrants
While bringing new production capacity and new resources to the industry, new entrants will hope to win a place in the market that has been carved up by existing enterprises, which may lead to competition with existing enterprises for raw materials and market share, and eventually lead to the reduction of profitability of existing enterprises in the industry, and even endanger their survival in serious cases.
4, the threat of substitutes
Two enterprises in the same industry or different industries may compete with each other because of the substitution of their products. This kind of competition from substitutes will affect the competitive strategy of existing enterprises in the industry in various forms.
5. Competition degree of competitors in the same industry
The interests of enterprises in most industries are closely linked. As a part of the overall strategy of an enterprise, the goal of each enterprise's competitive strategy is to make its own enterprise gain an advantage over its competitors. Therefore, conflicts and confrontations will inevitably occur in the implementation, which constitute the competition among existing enterprises.
Porter's Five Forces Model