Five Forces Model

A Porters five forces model and analysis can complement other corporate strategies, including SWOT analysis. Look at the list of Porters five forces. Degree of Rivalry is emboldened because it is central to all the other forces, but all can be looked at in the context of each element of a SWOT analysis to create a synergy between analysis techniques.

SWOT analysis focuses on strengths, weaknesses opportunities and threats. Each element of a Porters five forces analysis can be looked at through the lens of a SWOT analysis. For instance, supplier power is increased if they are many rivals trying to get the supplies. But, also, entry barriers are increased if there are many tough rivals in the field.

Other corporate strategies, like PESTLE analysis and Gap analysis, can add further dimensions. PESTLE analysis can give you an impression of the political, economic, sociological, technological, legal and environmental factors that influence Porter's five forces. Gap analysis allows you to see the gap between where a company is and where it should be, and what forces needed to be applied.

Porters five forces at Tesco PLC

Classical economics predicts that rivalry between companies should drive profits to zero. This is partly down to the threat of substitutes. For instance, Tesco has competition from companies like Sainsbury that can provide substitutes for their goods. This drives the prices of groceries down in both companies.

Buyer power also acts to force prices down. If beans are too expensive in Tesco, buyers will exercise their power and move to Sainsbury. Fortunately for Tesco, there are few other large supermarket companies. This means the market is disciplined -- the supermarkets have a disciplined approach to price setting. Discipline stops them destroying each other in a profit war.

Supplier power is an important part