Porter's Five Forces

Michael Porter, in the late 1970s, identified the forces that determine industry attractiveness. These forces – five of them – are powerful determinants of the overall profitability of any industry, not a bad thing for an aspiring entrepreneur to know:

■ threat of entry;
■ buyer power;
■ supplier power;
■ threat of substitutes;
■ competitive rivalry.

Assessing these forces and any ongoing or likely future changes therein lies at the heart of a macro-level assessment of industry attractiveness.