Market Forces Framework

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.

Market forces are competitive pressures in a free market that impact prices and output levels. The primary market forces in any market are supply and demand.

The Michael Porter’s Five forces analysis framework is used to analyse an industry and more specifically, the external business environment of the industry. This five forces framework tells us whether or not we should enter an industry, and also if we enter it, then what can be the challenges faced by us.

Market Forces Framework diagram