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Porter's Five Forces Explained - AQA Business Notes

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amelie

06/12/2025

Business

Porters 5 Forces - Business theories/models

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6 Dec 2025

2 pages

Porter's Five Forces Explained - AQA Business Notes

user profile picture

amelie

@106amelie

Porter's 5 Forces Model helps businesses analyse competition within their... Show more

# Porter's 5 Forces Model:

- a framework for analysing the nature of competition within an industry
- helps businesses understand and asses

Understanding Porter's 5 Forces

Porter's 5 Forces Model provides a structured approach for analysing competition and profitability within different industries. Each industry has unique characteristics that affect these forces, from market size and structure to distribution channels and growth potential.

The five forces that determine competitive intensity include:

  1. Threat of new entrants - How easily can new competitors enter the market?
  2. Bargaining power of buyers - How much leverage do customers have?
  3. Bargaining power of suppliers - How much control do suppliers have over you?
  4. Rivalry among competitors - How intense is competition between existing players?
  5. Threat of substitutes - How easily can customers find alternatives?

Quick tip: Industries like airlines and cafes typically generate low profits, while pharmaceutical companies and soft drink manufacturers enjoy higher profit margins due to how these five forces play out in their respective markets.

When barriers to entry are high, existing businesses face less competition and can potentially earn higher profits. Companies can reduce entry threats by building strong brand loyalty and protecting innovations through patents. Similarly, when customers have limited buying power, businesses maintain more control over pricing – think Apple with its loyal customer base.

# Porter's 5 Forces Model:

- a framework for analysing the nature of competition within an industry
- helps businesses understand and asses

Applying the 5 Forces in Business Strategy

Managing supplier power is critical for maintaining profitability. When few suppliers dominate, they can demand higher prices, squeezing your margins. Smart businesses work with multiple suppliers and may develop in-house production capabilities to reduce this vulnerability.

Competitive rivalry significantly impacts pricing strategies and profit potential. In highly competitive markets like fast food, aggressive pricing leads to lower profits. Conversely, luxury car manufacturers face less direct competition, allowing for premium pricing. To reduce rivalry impacts, focus on distinctive branding, continuous innovation, and building customer loyalty.

The threat of substitutes represents the risk of customers switching to alternative products or services. Netflix competes not just with other streaming services but with all entertainment options vying for consumer time. Businesses with few substitutes (like Rolex) enjoy greater market stability and pricing power.

Remember: The most successful businesses don't just react to these forces – they actively shape their strategy to influence them in their favour.

By understanding how these five forces interact in your specific industry, you can identify opportunities to strengthen your competitive position and develop strategies that maximise your profit potential.



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This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

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Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

 

Business

99

6 Dec 2025

2 pages

Porter's Five Forces Explained - AQA Business Notes

user profile picture

amelie

@106amelie

Porter's 5 Forces Model helps businesses analyse competition within their industry. This powerful framework enables companies to assess industry profitability and attractiveness by examining five key competitive forces that shape every market.

# Porter's 5 Forces Model:

- a framework for analysing the nature of competition within an industry
- helps businesses understand and asses

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Understanding Porter's 5 Forces

Porter's 5 Forces Model provides a structured approach for analysing competition and profitability within different industries. Each industry has unique characteristics that affect these forces, from market size and structure to distribution channels and growth potential.

The five forces that determine competitive intensity include:

  1. Threat of new entrants - How easily can new competitors enter the market?
  2. Bargaining power of buyers - How much leverage do customers have?
  3. Bargaining power of suppliers - How much control do suppliers have over you?
  4. Rivalry among competitors - How intense is competition between existing players?
  5. Threat of substitutes - How easily can customers find alternatives?

Quick tip: Industries like airlines and cafes typically generate low profits, while pharmaceutical companies and soft drink manufacturers enjoy higher profit margins due to how these five forces play out in their respective markets.

When barriers to entry are high, existing businesses face less competition and can potentially earn higher profits. Companies can reduce entry threats by building strong brand loyalty and protecting innovations through patents. Similarly, when customers have limited buying power, businesses maintain more control over pricing – think Apple with its loyal customer base.

# Porter's 5 Forces Model:

- a framework for analysing the nature of competition within an industry
- helps businesses understand and asses

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Applying the 5 Forces in Business Strategy

Managing supplier power is critical for maintaining profitability. When few suppliers dominate, they can demand higher prices, squeezing your margins. Smart businesses work with multiple suppliers and may develop in-house production capabilities to reduce this vulnerability.

Competitive rivalry significantly impacts pricing strategies and profit potential. In highly competitive markets like fast food, aggressive pricing leads to lower profits. Conversely, luxury car manufacturers face less direct competition, allowing for premium pricing. To reduce rivalry impacts, focus on distinctive branding, continuous innovation, and building customer loyalty.

The threat of substitutes represents the risk of customers switching to alternative products or services. Netflix competes not just with other streaming services but with all entertainment options vying for consumer time. Businesses with few substitutes (like Rolex) enjoy greater market stability and pricing power.

Remember: The most successful businesses don't just react to these forces – they actively shape their strategy to influence them in their favour.

By understanding how these five forces interact in your specific industry, you can identify opportunities to strengthen your competitive position and develop strategies that maximise your profit potential.

We thought you’d never ask...

What is the Knowunity AI companion?

Our AI Companion is a student-focused AI tool that offers more than just answers. Built on millions of Knowunity resources, it provides relevant information, personalised study plans, quizzes, and content directly in the chat, adapting to your individual learning journey.

Where can I download the Knowunity app?

You can download the app from Google Play Store and Apple App Store.

Is Knowunity really free of charge?

That's right! Enjoy free access to study content, connect with fellow students, and get instant help – all at your fingertips.

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Most popular content: Business Strategy

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Can't find what you're looking for? Explore other subjects.

Students love us — and so will you.

4.9/5

App Store

4.8/5

Google Play

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user