The Five Competitive Forces that Shape Strategy

In this update to his original 1979 HBR article “How Competitive Forces Shape Strategy”, Michael Porter extends the common understanding of what defines competition and competitors to include the likes of savvy customers, powerful suppliers, aspiring entrants, and substitute offerings. He is suggesting that it is therefore the direct responsibility and duty for strategists to understand the competitive forces and their underlying causes. This will allow the creation of the necessary framework to anticipate and influence the competitive landscape over time as well as understanding the industry landscape to drive their company’s profitability. By looking at each of these new competitors (buyers, new entrants, suppliers, and substitute offerings), the traditional ones, and the industry forces that are shaping it, will the strategist be able to develop an effective strategy for his/her company.