Week 4: Clear

Rivalry among existing companies is often thought to be the only factor determining how a company approaches its business model. This rivalry does account for a good deal of a company's strategy, but there are other factors that play into the equation. Porter discusses these five forces affecting business strategy in "The Five Competitive Forces That Shape Business Strategy."

These five forces are:

1. Rivalry Among Existing Competitors
2. Threat of New Entrants
3. Threat of Substitute Products or Services
4. Bargaining Power of Suppliers
5. Bargaining Power of Buyers

Image created by Andrew Storms.
http://www.flickr.com/photos/linecon0/1418535765/ 

These concepts are vital to the business environments. They shape the companies behave in the market economy. According to Porter, these general categories encompass all facets that need consideration in determining a business strategy. There are countless companies that have a worthy product, but ultimately fall short because they fail to determining a successful strategy. It is easy to start a business, but by taking into account all five of these competitive forces, companies are much more likely to stay alive and even thrive.