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Introduction Porter’s Five Forces model is a powerful management tool that analyzes the current industry attractiveness and profitability by using the outside-in perspective. Michael Porter developed the Five Forces model in the late 1970s. The Five Forces model is a simple but influential tool for the identification where power lies in a certain business situation by using the outside-in-perspective (Johnson, Scholes & Whittington, 2008). The framework identifies five forces in the microenvironment that drive competition and threaten a company’s ability to make profit. The derivation of the Five Forces framework of Porter is the industrial economics approach. The idea is that the attractiveness of market and its general profitability can mainly be defined by the market structure (Slater & Olson, 2002). The market structure as a result influences the strategic behavior of organizations, e.g. market success depends on the competitive strategy. Thus the organizational success is thus indirectly dependent on the market structure. According to Porter the “awareness of these forces can help a company stake out a position in its industry that is less vulnerable to attack” (Porter, 1979, p. 137). However it is necessary to mention that the
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