This continues our look at techniques to model viewpoints.

Porters Five Forces

This technique is used to assess the attractiveness of a market.

It consists of four forces that act upon a fith, which is the level of competition in the industry.

The four forces are:

- Threat of new entrants
- Bargaining power of suppliers
- Power of consumers
- Threat of substitute products and services

Weirdly, this doesn’t include regulatory or political factors which you would think would be important when assessing a market.

Say we looked at the online music market as an example and applied the above:

- Threat of new entrants is high as new online services are emerging all the time
- Bargaining power of suppliers is strong, since this includes artists and copyright holders who can dictate payment terms
- Power of consumers is strong- they can go elsewhere even to free download sites
- Threat of substitute products is high, as the Internet provides a myriad of ways of obtaining/consuming the same content.

It all makes sense, but you could argue that most markets can be categorised in much the same way, so in some ways I’m not sure the technique is particularly enlightening.But there you go.

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