Why do we use it?This analysis was originally developed by Michael Porter, a Harvard professor and a noted authorityon strategy. While all firms operate in a broad socioeconomic environment that includes legal,social, environmental, and economic factors, firms also operate in a more immediate competitiveenvironment. The structure of this competitive environment determines both the overall attractivenessof an industry and helps identify opportunities to favorably position a firm within an industry.Porter identified five primary forces that determine the competitive environment: (1) rivalry amongcurrent competitors, (2) threat of new entrants, (3) substitutes and complements, (4) power of suppliers,and (5) power of buyers.
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