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:
- Threats of entry.
- Bargaining power of buyers.
- Bargaining power of suppliers.
- Threats of substitute products.
- Rivalry among existing firms.