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...e five forces model is the framework for analyzing determinants of industry profitability. It is used to identify the threats and opportunities confronting a company that is thinking of entering into a particular industry. The model focuses on five particular forces that Porter says shape the competition that is in each particular industry. Rivalry among established firms is the central focus that is surrounded by the threat of potential entrants and substitute technologies, as well as bargaining power of buyers and suppliers. The first of Porter's five forces is the extent of rivalry among established firms in the industry. If there is strong rivalry in the industry, then competition will be fierce and profits will be limited. This will also limit other potential firms from entering the market. The second of the forces listed is the threat of potential entrants into the industry. These are the companies that are not currently in the industry but have the resources to enter the industry at any time. This is a threat because it is another company that can potentially take away market share. The third force that Porter mentions is the threat of substitute technologies. These are substitute products that can serve the industry as a replacement to the current technology. This is a threat because if a firm does not change with the times it could go bankrupt. The fourth force that Porter discussed was the bargaining power of the buyers. He believed that the buyers, or customers, were threats when they were able to force prices down and quality up. In this case, the operating cost of the supplier would increase and profits would decrease. The final force that is talked about is the bargaining power of the suppliers. The suppliers became threats when they also had influence on raising prices, which in turn raised the operati...