The five-force analysis is: the bargaining power of buyers, the substitution ability of substitutes, the bargaining power of suppliers, the entry ability of potential competitors and the current competitiveness of competitors in the industry. The five-force analysis model was put forward by Michael Porter in the early 1980s, which had a far-reaching global impact on enterprise strategy formulation. Used in competitive strategy analysis can effectively analyze the competitive environment of customers.

Significance of five-force analysis model

1, strategists can know the information of the whole industry, which is obviously difficult to do in reality; 2. There is only a competitive relationship between the same industry, and there is no cooperative relationship. But in reality, there are many cooperative relationships between enterprises, which are not necessarily competitive relationships.

3, the industry scale is fixed, therefore, only by taking the opponent's share to occupy more resources and markets. But in reality, enterprises often do not eat their opponents, but make big cakes with them to get more resources and markets. At the same time, the market can increase its capacity through continuous development and innovation.

Porter's "five forces" analysis method is a static cross-sectional scan of the profitability and attractiveness of an industry, which shows the average profit space of enterprises in the industry, so it is a measure of the industry situation, not the ability of enterprises.