Newman Library, Graduate Services

a blog about library developments, research practices & advice, and graduate student input

Industry Analysis – Porter’s “Five Competitive Forces That Shape Strategy”

Posted by lrath on March 11, 2008

Michael Porter’s theory of the “Five Forces” is often used as the framework for industry analysis in business strategy classes. Porter wrote the classic article “How Competitive Forces Shape Strategy” in the Harvard Business Review in 1979 and followed in 1980 with the book Competitive Strategy. Ever since students have been testing the power of suppliers, the power of buyers, the threat of substitute products or services, and the rivalry among existing competitors. If you are doing an industry analysis you might want to read Porter’s latest article onThe Five Competitive Forces That Shape Strategy.” The article is practical (not theoretical) and uses contemporary examples from well known companies like IBM, Wal-Mart, Apple and Sysco. Porter gives advice on how to define an industry. He outlines the six steps in industry analysis:

  1. Define the relevant industry
  2. Identify the participants and segment them into groups
  3. Assess the underlying drivers of each competitive force to determine which forces are strong and which are weak and why
  4. Determine overall industry structure and test the analysis for consistency
  5. Analyze recent and likely future changes in each force, both positive and negative
  6. Identify aspects of industry structure that might be influenced by competitors, by new entrants, or by your company.

All issues of the Harvard Business Review are available to Baruch students in Business Source Premier, a Newman Library database. Porter’s article appeared in the January 2008 issue on pages 79 to 93. If you are connecting to the database from off campus, you will be prompted to type in your Baruch username and password. (Thanks to Prof. Louise Klusek, business librarian, for this post!)

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