The six forces model is an analysis model used to give a holistic assessment of any given industry and identify the structural underlining drivers of profitability and competition.[1][2] The model is an extension of the Porter's five forces model proposed by Michael Porter in his 1979 article published in the Harvard Business Review "How Competitive Forces Shape Strategy". The sixth force was proposed in the mid-1990s.[3] The model provides a framework of six key forces that should be considered when defining corporate strategy to determine the overall attractiveness of an industry.
The forces are:
Competition – assessment of the direct competitors in a given market
New Entrants – assessment in the potential competitors and barriers to entry in a given market
End Users/ Buyers – assessment regarding the bargaining power of buyers that includes considering the cost of switching
Suppliers – assessment regarding the bargaining power of suppliers
Substitutes – assessment regarding the availability of alternatives
Complementary Products – assessment of the impact of related products and services within a given market
Although there are a number of factors that can impact profitability in the short term – weather, the business cycle – an assessment of the competitive forces in a given market provides a framework for anticipating and influencing competitiveness and profitability in the medium and long term.[4][5]
The Six Forces Model expands the Five Forces Model based on market changes. It adapts well to the technological business world. It can analyse whether the company can enter the market complementary to other products or services and act as a long-term substitute for a particular product or service.[6]
^"Tom Stewart interviewing Michael Porter". YouTube. Archived from the original on 2021-12-13. Retrieved 12 October 2014.
^"Corporate Strategy - Porter's Five Forces Model". Cleverism. Retrieved 27 December 2015.
^"Six Forces Model Definition". Investopedia. Retrieved 10 October 2014.
^"Forces that Shape Strategy". Harvard Business Review. Retrieved 12 October 2014.
^Riley, Jim. "Porter's Five Forces Model". tutor2u. Retrieved 12 October 2014.
^Cuofano, Gennaro (2023-01-26). "Six Forces Model And Why It Matters In Business". FourWeekMBA. Retrieved 2023-04-23.
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