It is important to understand that analyzing an industry using the Five Forces framework gives you a snapshot in time of the industry. Conversely, the lower the competitive forces, the higher the profit potential and the more attractive the industry. The model essentially says that the higher the competitive forces, the lower the profit potential and the less attractive the industry. To use the Five Forces model, you must analyze the five meso-level competitive forces to understand a market’s attractiveness. Porter developed the Five Forces model in response to SWOT analysis, which he found too subjective and lacking rigor. Most companies already watch their closest competitors’ moves, but carrying out a broader meso analysis such as Porter’s Five Forces allows you to observe and shape other factors that impact your profitability. The meso level sits between these two levels, and whilst firms can influence these factors they don’t have complete control over them. The micro-level is internal to the organization and entirely under its control, so if a firm wants to change the color of its website it can go straight ahead and make it happen. The macro-level has a one-way effect on a firm, and the firm has no control over it, for example, if the government changes the tax rate there is nothing the firm can do about it. The meso level sits between the macro and micro levels of analysis. Meso-level forces are those external forces in direct contact with a company. The model works by analyzing factors at the meso level. Since the model was first published in 1979 in the Harvard Business Review, it has been named one of the ten most influential papers ever published by that publication. The Five Forces framework was developed by Harvard Business School professor Michael E.
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