Major Forces in Industry Sector

This model allows an organisation to identify the major forces that are present in the industry sector. This can be related to the critical factors that were identified by the PEST analysis. Several issues then need to be considered:

What is the likelihood that the nature of the relationships, identified by the ‘five forces’ model, will change given the trends in the external environment? Are there ways of benefiting from these potential changes?

What actions can the organisation undertake that will improve its position against the current forces in the industry? Can the company increase its power, compared to suppliers or buyers? Can actions be taken to reduce competitive rivalry, or are there ways of building barriers to dissuade companies from considering entering the industry? Are there ways of making substitute products less attractive?

The organisation will also need to consider its competitors. Given the forces in the industry, what is the relative position of the organisation’s rivals? Do conditions favour one operator? Could conditions change in favour of one competitor?