Porter's Five Forces is a framework for assessing the market and competitive dynamics in your industry. This video explains the five forces and how they impact your business: competitive dynamics, buyer power, supplier power, threat of new entrants, and the threat of substitute products.
- You should have a working knowledge…of the competitive environment…your company is competing in.…A great tool for understanding…in the competitive environment is a framework…called Porter's Five Forces.…It was created by Dr. Michael Porter…to look at the dynamics in an industry…and understand how are the competitors going to behave.…You can learn more about Porter's Five Forces…and how they can be used in strategic planning…in my Strategic Planning Fundamentals course.…
Now, the five forces that you should understand…are first, competitive rivalry,…buyer power, supplier power,…threat of new entrance,…and threat of substitution.…Competitive rivalry is all about how…the competitors in your industry behave.…How many are there?…Are they rational or irrational?…Do they collaborate or compete fiercely?…Looking at buyer power,…these are your customers.…
How much power do your customers have over you?…If you only have one or two really big customers,…there's a lot of buyer power there.…If you have a very distributed customer base…
- What business are you in?
- What's your market and who is your competition?
- What problem does your business solve?
- How are your products and services created? What are your pricing and growth strategies?
- How do you measure performance?
With the answers in hand, you can be assured your have the knowledge to make the best decisions for your business.
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- Define and explain business acumen.
- Describe different types of growth horizons.
- Identify critical elements of knowing your business.
- Explain the effects of price changes on profits.
- List common growth methods.
- Evaluate your initiative pipeline.
- Define common business terms.
- Assess trends and your competitive environment.