Five Forces Drive Profitability

"Numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure.

Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.

Diagram of Porter's 5 Forces

Refer to this QuickMBA article for a detailed explanation of the foregoing diagram and Porter's Five Forces.

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