Answer:
Created by a Professor Michael E. Porter, from Harvard, this model explains the various forces applied to a business.
Competition in the industry
: Are there competitors in the industry? If so, are they numerous and weak or is the industry dominated by a few major players?
Potential of new entrants into the industry
: What's the risk of having new competition? If you are selling a product, can you protect it with a patent for example?
Power of suppliers
: Can the suppliers of what you need easily affect the prices? It's basically asking if there is competition in your suppliers' market.
Power of customers
: That related to your customer base. If your customer base is large, chances are no individual will be able to force your price down. But if you are dealing with a limited number of customers, one of them might force you to lower your prices.
Threat of substitute products: Is there any comparable product/service offered at a lower cost that might bring your prices down?
