Discussion Question

Can someone please describe Michael Porter's Five Forces Model. I don't fully understand what he attempts to explain, can someone explain for me? Also, how might the forces function and affect industry profits? If anyone has any information on any of these question, I would appreciate it, thank you ;)

Five forces is a model for analyzing competition in a particular industry to determine marketing and operational strategies. They are:

1) Threat of new competition. The more competition, the more difficult it is to make a profit.

2) Threat of substitute products or services. What happened to sales of Kodak's film products when digital cameras came out?

3) Bargaining power of customers. Is it a buyer's market? Can the customer go down the street and buy one just like it?

4) Bargaining power of suppliers. What are your alternatives when your suppliers go up on price?

5) Intensity of competitive rivalry. Does Wal-Mart sell your product? :-)

Like many other theoretical models, I would consider it one tool in a strategist's toolbox but would not stake my entire fortune in a business because it looked good in one model.