The Five Forces in Plain English

According to Harvard Business School’s Institute for Strategy and Competitiveness there is a framework for understanding competition within an industry: The Five Forces. Although the Five Forces officially consist of bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat of substitute products or services and rivalry among existing competitors, in the simplest English possible they just mean when a company is in a position of power they can request more for their money’s worth or switch over to the competition, that powerful suppliers can ask for more money, that new companies coming into an industry can force older ones to keep their prices low, that new products or services pose a threat to older ones and finally, that intense rivalry brings prices down for everyone. These concepts are key because a business can only survive if it stays atop current industry events.

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