The five forces
I was at the first 2008 Enterprize event, and heard about a model I haven’t come across before, from the speaker Permjot Valia.
The full name of the model is Porters 5 Forces, and a full explanation can be found on wikipedia.
These are the forces that determine the overall attractiveness of a market.
The threats are:
- Bargaining power of suppliers - how much power the suppliers have (customers/pharmaceuticals).
- Bargaining power of customers - how much power the customers have (think farms/supermarkets).
- Threat of new entrants - how hard is it to set up a new business.
- Threat of substitute products - customers may drive instead of taking a train
- Established competition - who’s already in your space.