Citation (IEEE): M. E. Porter, “The Five Competitive Forces That Shape Strategy,” Harvard Business Review, vol. 86, no. 1, pp. 78–93, Jan. 2008.
What it argues
Porter revisits his 1979 framework. He argues that an industry’s long-run profitability is set by its structure: the rivalry among existing firms and four outside pressures, namely the threat of new entrants, the bargaining power of buyers and of suppliers, and the threat of substitutes. Growth rates, technology and government policy matter only through their effect on these forces. He shows how to analyze each force and warns against common errors, such as defining the industry too broadly or simply listing factors. Strategy, in this view, means positioning the company where the forces are weakest, exploiting shifts in them, or reshaping them in the company’s favor.