When I’m drafting up a business plan
or trying to understand a new-to-me industry,
I often use Porter’s Five Forces as a checklist.
The five forces affecting any company or industry are;
Potential Entrants
Profitable industries draw competitors.
Are there barriers to entry such as high capital costs or government policies?
Competitive Rivalry
More competitors in a shrinking marketing will affect profitability.
Substitutes
Can and do customers switch easily between substitute products?
The Bargaining Power Of Buyers
The less buyers there are, the more control they have.
and
The Bargaining Power Of Suppliers
Again, less suppliers, more control they have.