What is the five forces model?
The five forces model explains how industry profitability is shaped by rivalry, buyer power, supplier power, new entrants and substitutes. Michael Porter introduced it in a 1979 Harvard Business Review article and revisited it in 2008. Where the forces are strong, customers, suppliers, rivals or substitutes take much of the margin the industry could earn. A company can use the model to size up an industry and choose where in it to compete.
Why it matters to a revenue leader
The forces explain why pricing feels easy in one segment and hard in another. In commercial services, national facility buyers can hold real buyer power, while code-required inspection work faces few substitutes. A sponsor's commercial due diligence may frame the market the same way, and a CRO who can map the sales plan to these forces speaks the deal team's language.
Example
A PE-backed elevator service company finds that national property managers negotiate hard and switch providers at renewal, while independent building owners tend to renew without a bid. The revenue leader shifts new-logo effort toward independent owners, where buyer power is weaker, and prices national renewals with that pressure in mind.
"Which of the five forces is squeezing our price in our largest segment?"
Sources
- How Competitive Forces Shape Strategy - Harvard Business Review (Michael E. Porter, 1979) checked 9 Oct 2026
- The Five Forces - Institute for Strategy and Competitiveness, Harvard Business School checked 9 Oct 2026
- The Five Competitive Forces That Shape Strategy - Harvard Business Review (Michael E. Porter, 2008) checked 9 Oct 2026