![]() ![]() Note that the arrows in the diagram show two-way relationships between rivalry and all of the other forces. Industry rivalry, the first of Porter’s forces, is in the centre of the diagram. ![]() Image © Rice University & OpenStax, CC BY 4.0 Industry Rivalry 5.4 Porter’s Five Forces Model of Industry Competition It is important to note that this tool is different than Porter’s generic strategy typology that we will discuss later. Each of the forces represents an aspect of competition that affects a firm’s potential to be successful in its industry. Porter’s Five Forces is a tool used to examine different micro-environmental groups in order to understand the impact each group has on a firm in an industry (Figure 5.4). Harvard strategy professor Michael Porter developed an analysis tool to evaluate a firm’s micro environment. ![]() Firms in an industry may or may not compete directly against one another, as we’ll discuss shortly, but they all face similar situations in terms of customer interests, supplier relations, and industry growth or decline. All firms are part of an industry-a group of firms all making similar products or offering similar services, for example, automobile manufacturers or airlines. 5.4 A Firm’s Micro Environment: Porter’s Five ForcesĪ firm’s micro environment is directly connected to the firm in some way, and firms must understand the micro environment in order to successfully compete in an industry. ![]()
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