STRATEGIC PLANNING – COMPETITOR ANALYSIS – PORTER 5 FORCES MODEL
One very effective way for evaluating the competitive situation of an industry is to use the 5 (or 7) forces screening of Michael Porter. He published his book 25 years ago and it became a ‘must read’ for anyone working with strategic planning.
The conclusions one can derive:
- who are my competitors today and who might become competition in the near future through backwards integration of customer, forward integration of suppliers, a new industry entrant or a trend for replacement products
- how competitive is an industry enviroment
Populating the model guides your ‘thinking through’ process and makes you look around corners. The content going into the boxes is for a large part general knowledge. I still recommend using it, because it makes you watch out for changes within any of the boxes, e.g. a growing trend that could substitute a product or a change in law that allows the entry of new competitors. These kind of changes are easily overlooked, but can influence and completely change the industry you are in.