Porter's five forces
One type of marketing analysis is to consider a market in terms of certain forces that influence how competitive it is for the businesses within it, or for those hoping to enter it. One strategic framework for conducting this analysis is Michael Porter's five forces model. This model has similarities with other tools for environmental audits, such as PEST analysis. However, Porter's model tends to focus more on the single business or SBU (Strategic Business Unit) rather than on a single product or range of products. For example, General Electric might analyse the market for Consumer Electronics or Healthcare as it has SBUs in both.
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When deciding on strategy, the five forces are an important part of the decision-making process. Using the analysis, firms should set a strategy to reduce threats from substitutes and new entrants and to reduce the power of buyers and sellers. Some of these possibilities should be included in an examination answer.
In addition when answer an examination questions you should not only consider the strength of each of these forces (quantify the strengths if possible), but also offer conclusions on how attractive the market is.