The 5 Charts that Changed Businesses: The 5 Forces

Posted on September 10, 2012

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People don’t usually think of charts as groundbreaking innovations.  But the visual aid of a chart often helps us draw valuable conclusions from otherwise unorganized data.  DaVinci Business Graphics continues our series on the 5 charts that changed the business world, taking a look at the 5 Forces.    

Developed back in 1979 by Michael E. Porter, the 5 Forces is a framework for developing business strategy and industry analysis.  The chart draws upon industrial organization economics to derive 5 forces that affect almost all industries, helping businesses determine the competitive intensity and therefore attractiveness of a market.  An unattractive market is one in which the 5 forces act to drive down overall profitability.

Before Porter’s chart, few people considered why some industries were more or less profitable than others or how consistent their profits were over time.  Porter’s diagram changed that—and students, strategists, consultants, and entrepreneurs now assess a company’s competitive position according to the strength of the 5 forces.

The 5 forces that Porter came up with are: the bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitute products, and competitive rivalry within an industry.  The 5 forces chart and its complementary business analysis have been applied to a wide range of problems, from helping businesses become more profitable to helping governments stabilize industries.

Although it has been disputed, rejected, and altered throughout the years, Porter’s 5 forces is still one of the most impressive examples of how charts can help business strategy and planning.  If your business needs help planning business goals and measuring progress, consult DaVinci Business Graphics.  We’ve been providing businesses with the custom business charts (http://www.davincibg.com/) they need for over 25 years.  We print the highest quality business charts designed to your specifications.

 

Contact DaVinci Business Graphics today and discover how our charts can help you better manage your business

Visit Us on the Web at davincibg.com

Or Call Us at 1-949-679-7666

 

Image 1 via hbr.org, Image 2,3 via smallbusiness.chron.com, Image 4 via davincibg.com

 

 

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