Competitive Structure of Industries

In order to formulate appropriate strategies, a company must identify and understand the nature and degree of competition in the industry. Michael Porter1 a model identifying the forces that affect the competitive dynamics of an industry. According to this model, the state of competition in an industry depends upon the following five forces:

  1. Threats of entry.
  2. Bargaining power of buyers.
  3. Bargaining power of suppliers.
  4. Threats of substitute products.
  5. Rivalry among existing firms.

POTENTIAL ENTRANTS

Competitive Structure of Industries