Porter’s 5 Forces Model |Startup | Sarthak Ahuja

Most Founders miss this while doing a SWOT analysis of their Business Idea

👉🏼 It’s so surprising to see that the easiest and the most important tool for business SWOT analysis is taught in 11th Standard Business Studies, but is forgotten or disregarded by most Founders while evaluating their own business idea

👉🏼 It’s the Porter’s 5 Forces Model popularised by the Harvard Professor Michael Porter, and it explains the 5 forces a business needs to tackle well to develop a sustainable moat

1/ Industry Rivalry: Larger the number of competitors vying for market share, lesser the power of the company. Prefer to enter a market where you can attempt to be a monopoly or a part of a duopoly.

2/ Threat of New Entrants: If anyone can easily enter the industry to provide the same product or service, you may not have a sustained advantage to keep making money over a period of time.

3/ Bargaining Power of Suppliers: If you’re dependent on just a few suppliers in the industry, you may not have the power to control costs. And if your suppliers start favouring your competitors over you, it’ll be tough to survive.

4/ Bargaining Power of Buyers: If your business is dependent on just a handful of customers, the risk to your revenue is high if any of them switches to another vendor. More and diversified customer base may mean lower volatility in revenue expectations.

5/ Threat of Substitutes: Businesses that produce goods or services for which there are close substitutes, may also have to struggle to constantly find ways to differentiate themselves to charge a premium.

👉🏼 Use the above as a framework for SWOT and while thinking through your moat.

------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------

Like, Share, Subscribe for more!

Follow me on my other social media handles for all updates, events and live sessions-
-------------------------------------------------------------------------------------------------------------------------

A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.

Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.

startups, startupindia, ecommerce, d2c, market sizing, customer acquisition, ca sarthak ahuja,porters 5 forces model, sarthak ahuja, startup dubai, startup toronto, startup india, startup toronto

[vrushabhborkar]

Michael porters five forces model

1. Threats of new entrants
2. Bargaining power of buyers
3. Bargaining power of suppliers
4. Threat of substitute product/services
5. Intensity of competitive rivelery

[aastikagarwal]

Competitive pressure arising from these five forces determines industry’s profitability