Table of Content

Five Forces analysis

Porter`s five forces analysis is tool for understanding the competition of business. Five forces impact the overall of profitability of any company or business adversely. Five forces come from either horizontal or vertical competition; three forces come from horizontal one and the remaining from vertical.

Threat of new entrants

If market is perfect or monopolistic competition, type of entry is free. If any firm is making profit, other firms can have desire to enter. Firms stay until the minimum rate of profit which is enough to survive in the market. If you have little protection, it makes easy for the others to enter; it requires strong durable barriers to entry.