Assumptions of the Five Forces model

Five Forces (Porter) | Five Forces Analysis
Knowledge Center

Best Practices

Sign up


Assumptions of the Five Forces model

The Five Forces model has two basic premises. The first is that the goal of a business is long-term profitability. The second is that the intensity of competition in an industry is neither a matter of coincidence or bad luck. Competition is rooted in an industry's economic structure.


Assumption in Porter's 5 Forces

Yet another major assumption of Porter's Five Forces Framework is that he views all industries as based on COMPETITION. However there are important exceptions on this view, such as for example in the automotive industry, where strong COLLABORATION between assemblers and their suppliers have turned out to be very beneficial for all parties. The same may be the case for knowledge-intensive industries, since knowledge sharing increases its overall value. Furthermore, Edward Freeman argues that the economic paradigm of competition should be replaced by the more sustainable paradigm of collaboration with stakeholders.


Assumption: Product (Services) Markets...

There is yet another important assumption in the P (...)

Start a new forum topic


More on Five Forces (Porter) | Five Forces Analysis:
Special Interest Group

Do you have a keen interest in Five Forces (Porter) | Five Forces Analysis? Become our SIG Leader

Five Forces (Porter) | Five Forces Analysis
Knowledge Center

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 25-10-2021. All names of their owners.