Customers, suppliers, substitutes and potential entrants—collectively referred to as an extended rivalry—are competitors to companies within an industry. The five competitive forces jointly determine the strength of industry competition and profitability.

What are the five industry forces?

Porter’s Five Forces is a framework for analyzing a company’s competitive environment. The number and power of a company’s competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company’s profitability.

What are the five forces that drive competition in an industry?

He identified five forces that make up the competitive environment that can eat into your profitability: buyer power, supplier power, competitive rivalry, the threat of substitution, the threat of new entrants.