They are:

• The threat of new entrants to the market. Companies in markets with high barriers to entry – whether through regulation, high fixed and/or start-up costs, protected intellectual property, etc.
• The power of the suppliers.
• The power of the buyers.
• Availability of substitutes.
• Competitive rivalry.

Porter’s Five Forces Analysis is an important tool for understanding the forces that shape competition within an industry. It is also useful for helping you to adjust your strategy to suit your competitive environment, and to improve your potential profit.

Porter’s Five Forces cannot be considered as outdated. The basic idea that each company is operating in a network of Buyers, Suppliers, Substitutes, New Entrants and Competitors is still valid. The three new forces just influence each of the Five Forces.

Porter’s Five Forces model is often used as a tool for analyzing industries and competitive structures within them. The model’s central tenet is that an industry’s profit potential is determined to a large extent by either one or a combination of five competitive forces within that industry.

In Porter’s Five Forces, supplier power is the degree of control a provider of goods or services can exert on its buyers. Supplier power is linked to the ability of suppliers to increase prices, decrease quality, or limit the number of products they will sell.

There are five major factors when determining the bargaining power of suppliers:

1. Number of suppliers relative to buyers.
2. Dependence of a supplier’s sale on a particular buyer.
3. Switching cost (switching costs of suppliers)
4. Availability of suppliers for immediate purchase.
5. Possibility of forward integration by suppliers.

The Threat of New Entrants Explained When new competitors enter into an industry offering the same products or services, a company’s competitive position will be at risk. Therefore, the threat of new entrants refers to the ability of new companies to enter into an industry.

In Porters five forces, threat of new entrants refers to the threat new competitors pose to existing competitors in an industry. Therefore, a profitable industry will attract more competitors looking to achieve profits.

8 tips for dealing with competitors

1. Do the market research before you launch.
2. Beware of ‘no competitors’
3. Know your past and future competitors.
4. Figure out your competitive differentiation.
5. Keep track of your competition, but ignore the noise.
6. Accept and play “The Idea Exchange” game.
7. Build relationship with your competitors.
8. Win with your heart and mind.

7 tips: This is How You Stand Out Amongst Your Competitors

1. Meet your target market’s challenges with solutions. A good way to get more participants is to address and solve their challenges.
2. Find and use your USP.
3. Stand out visually.
4. Highlight good customer reviews.
5. Provide the best customer service.

11 ways to outsmart, not outspend your competition

1. Know thyself. Understand who you are and what you stand for as a brand.
2. Know your audience. Learn about your buyers, clients and prospects.
3. Don’t be everything to everyone.
4. Stay focused.
5. Put your people to work.
6. Create evangelists, not just customers.
7. Get involved.
8. Choose wisely.

The four primary methods of gaining a competitive advantage are cost leadership, differentiation, defensive strategies and strategic alliances.

: one that competes: such as. a : rival a fierce competitor on the soccer field. b : one selling or buying goods or services in the same market as another offering lower prices than our competitors.

Economists have identified four types of competition—perfect competition, monopolistic competition, oligopoly, and monopoly.

Competition is a negative interaction that occurs among organisms whenever two or more organisms require the same limited resource. For example, animals require food (such as other organisms) and water, whereas plants require soil nutrients (for example, nitrogen), light, and water.

Firms are said to be in perfect competition when the following conditions occur: (1) many firms produce identical products; (2) many buyers are available to buy the product, and many sellers are available to sell the product; (3) sellers and buyers have all relevant information to make rational decisions about the …