Porter’s five forces model revolves around five competitive forces that individually or collectively define an industry and its competitors. While a study of all five forces could be undertaken relative to any given firm, typically only the competitive dimension is the most important and that is the degree of competitive rivalry within an industry. Porter’s forces include: 1) threat of new entrants, 2) bargaining power of suppliers, 3) threat of substitutes, and finally, 4) the bargaining power of customers.

All industries are competitive to a degree and identifying the sources and the character of each industry’s competitiveness is critical to developing sound business strategy . In a recent article entitled, “Ten Ideas From Academia ,” Edwards describes how the theoretical model describing the character of the various competitive forces can actually be applied in industry.

            In the world of business enterprise, just as all competitors are not equal in threat, so too are all competitive forces not created equal. Porter’s five forces: rivalry, threat of substitutes, threat of new entrants, supplier bargaining power, and the negotiating power of buyers, all occur to varying degrees from industry to industry. Identifying which specific competitive forces characterize a particular industry should be one of the first activities executive leadership does in order to clarify forward business strategy.

            Edwards is adept at point threat identification and assessment out utilizing existing theories such as Porter’s Five Forces analysis. While many executives in business management might discount such theories as purely academic exercises, Edwards successfully points out that developing a better sense of a company’s particular threat structure can lead it to successfully enter new markets. It can also provide a company with a competitive advantage that other companies do not recognize.