Porter’s 5 forces

Porter's 5 Forces model analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths.

1. Industry competitors: This describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because of the high cost of competition.
2. Potential entrants: Ease of new entrants entering the market and competing with your business
3. Suppliers bargaining power: How much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then it holds substantial power.
4. Buyers bargaining power: This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then the customer holds substantial power.
5. Threat of substitute products: Businesses that offer alternative products/solutions.

Government legislation can act as the sixth force as it can influence all the other forces.