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Porter’s Five Forces

Porter’s Five Forces analyses industry competitive pressure through rivalry, threat of entrants, threat of substitutes, buyer power and supplier power. It helps assess the potential for sustainable returns and how industry conditions shape strategy. It is not a direct score of one firm’s internal capability, and boundaries, regulation and changing technology can complicate its use. Apply the forces to evidence about the specific market rather than assume they operate equally everywhere.

Worked example

A supplier with unique certified components and few alternatives may have strong bargaining power, affecting the buyer’s costs and strategic options.

Common mistake

A substitute meets a similar need through another solution; it is not simply another brand in the same product market.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Supporting September 2026–June 2027
ACCA BT Direct September 2026–June 2027
ACCA SBL Direct September 2026–June 2027
FIA FBT Direct September 2026–June 2027