PORTER'S COMPETITIVE FORCES MODEL

1. Substitute Products and Services

1.1. substitutes that your customers might use if your prices become too high

1.2. Internet telephone service can substitute for traditional telephone service

1.3. The more substitute products and services in your industry, the less you can control pricing and raise your profit margins.

2. Customers

2.1. The power of customers grows if they can easily switch to a competitor's products and services

2.2. If they can force a business and its competitors to compete on price alone in a transparent marketplace where there is little product differentiation and all prices are known instantly

3. Suppliers

3.1. The more different suppliers a firm has, the greater control it can exercise over suppliers in terms of price, quality, and delivery schedules.

4. Traditional Competitors

4.1. Existing firms that share a firm's market space

5. New Market Entrants

5.1. Advantages

5.1.1. not being locked into old equipment and high motivation

5.2. Disadvantage

5.2.1. Less expertise and little brand recognition

5.3. Some industries have lower barriers to entry

5.3.1. cost less for a new company to enter the field