As I’ve mentioned before, I completed a master’s degree in engineering and technology management at Bosphorus University. In the Strategic Planning and Management course I took during my second semester, we studied Michael Porter’s “Five Forces of Competition” model. That’s when I got the brilliant idea to build on it. I’m dedicating this post, in which I add seven new elements to the model, to those who are deeply engaged in this topic.
First, for those unfamiliar with Michael Porter: Michael Everett Porter (born 23 May 1947) is an American academic and economist. He is a professor of Economics and Management at Harvard Business School and the head of the Institute for Strategy and Competitiveness. He is one of the world’s leading scholars in the field of strategic management. His academic work focuses on how companies or regions can develop competitive advantages. You can find more details at https://tr.wikipedia.org/wiki/Michael_Porter .
Porter’s Classic Model
One of Porter’s major contributions is the Five Forces model, a framework used to analyze the competitive landscape within an industry. It examines the following forces (I used ChatGPT for these brief descriptions):
1) The Threat of New Entrants: This power is a measure of the likelihood of new companies entering the market and the impact this has on increasing competition. It examines the impact of the potential entry of new competitors. High barriers to entry in an industry (e.g., high capital requirements, strict regulatory requirements, technological expertise, or strong brand loyalty) work to the advantage of existing firms.
For example, in the automotive sector, entry for new players is quite difficult due to high production costs, advanced R&D requirements, and the customer loyalty established by existing major brands. In contrast, in a technology sector offering digital services, entry barriers are low, allowing new companies to enter the market quickly.
2) Bargaining Power of Suppliers: This refers to the influence suppliers have over the cost and quality of inputs. This force assesses how much control suppliers have over pricing, quality, and delivery terms. If the number of suppliers is limited, or if their products are unique, they are in a stronger position and can raise prices or impose stricter terms.
For instance, a food producer that relies on a single region for organic raw materials is vulnerable to that supplier raising prices or changing contract conditions, thereby increasing the producer’s costs.
3) Bargaining Power of Buyers: This is the ability of customers to push prices down or demand greater value. It reflects how much influence customers have over price, quality, and service terms. If customers can easily switch to alternative products or purchase in large volumes, their bargaining power increases.
For example, large retail chains that source products from multiple suppliers and make high-volume purchases can demand discounts or special terms from vendors.
4) The Threat of Substitute Products or Services: This force evaluates the risk of alternative products or services replacing existing ones. It examines whether viable substitutes are available in the market. If substitutes are appealing, customers may shift toward them, which can reduce the market share of the current offering.
For instance, the shift from reading physical newspapers to accessing news online has heightened the threat of substitution in the print media industry, leading to a decline in demand.
5) Rivalry Among Competing Firms: This refers to the intensity of competition among existing players. The degree of rivalry is shaped by factors such as product differentiation, price competition, market dominance, and growth rates.
In the smartphone market, for example, intense competition among major players like Apple, Samsung, and Huawei—driven by constant innovation—keeps the rivalry at a high level.
This model helps businesses understand their competitive landscape and identify strategic improvement areas.
7 Updated Additions to the Model
Now that we’ve briefly covered Porter’s original Five Forces, let’s dive into the additional forces I believe should be included. The idea to write about this topic was sparked during our final Strategic Planning and Management class, when a student asked Professor Nilsen at the end of the session: “Can these forces be updated to reflect today’s business environment?” That simple question triggered a flood of ideas. Professor Nilsen casually mentioned one of them herself. The class, which was supposed to end at 10 PM after starting at 7, ran well past 10:15 as we continued discussing this topic. Since I had a trip scheduled early the next morning, I had to leave and unfortunately didn’t get to hear the rest. But I’ll now share the insights I wasn’t able to contribute during the class—starting with the one Professor Nilsen raised: sustainability. Here are the seven additional strategic forces I believe can complement Porter’s model to help businesses better define areas for strategic improvement. (These ideas are my own; I used ChatGPT to help flesh them out and save time, but I also added my own contributions.)
1) Sustainability: The first concept Professor Nilsen brought up was sustainability—and I agree 100%. Today, environmental, social, and governance (ESG) criteria play a vital role in business strategy due to increasing regulatory pressures and growing consumer expectations. Sustainability is key to long-term success and brand reputation.
For example, investments a company makes to reduce its carbon footprint can improve cost-efficiency while also enhancing its appeal to environmentally conscious consumers.
2) Agility: The first force I personally thought of was agility. Agility is the ability of a business to swiftly adapt to market changes, customer expectations, and unforeseen crises. This trait enables organizations to maintain a dynamic structure and gain a competitive edge. Agility also allows companies to respond quickly to shifting market conditions, extending their survivability in turbulent times.
For instance, during the pandemic, companies that rapidly shifted their business models to digital platforms were able to continue operations and stay competitive under drastically altered conditions.
3) Speed and Agility: In today’s world, it’s no longer the big fish that swallows the small, it’s the fast fish that swims circles around the slowpokes. In a competitive landscape, speed and dynamism have become critical. The ability to react quickly in certain situations can be the key to survival or even a company’s breakthrough to the next level.
Take the pandemic as an example: Dr. Uğur Şahin, co-founder of BioNTech, originally using mRNA technology to fight cancer, swiftly redirected all company resources toward developing a vaccine to stop the pandemic. And he succeeded. The vaccine’s clinical trials began in April 2020. In Phase 3 alone, more than 40,000 people participated. An interim analysis of 180 COVID-19 cases in December 2020 found the vaccine to be 95% effective in preventing the disease. The UK became the first country to authorize its emergency use that same month, and many others followed suit. On 23 August 2021, the Pfizer-BioNTech vaccine became the first COVID-19 vaccine fully approved by the U.S. FDA for use in individuals aged 16 and older.
4) Access to Capital: Access to financial resources is essential for R&D, innovation, and growth strategies. Whether or not a company can secure adequate funding often determines whether it can launch new projects or strengthen its competitive edge. In many industries, easy access to capital becomes a differentiator and source of advantage.
For example, tech companies with high growth potential often leverage investor support to rapidly develop new products and enter markets. In countries like the United States, where capital is abundant, launching a business and scaling quickly is much easier. In fact, many industries that are difficult to grow elsewhere take root in the U.S. precisely because of this abundance, and from there, expand globally.
5) Ability to Use Cutting-Edge Technology: Technological infrastructure and innovative solutions significantly boost efficiency across everything from production to customer service. Businesses that can effectively integrate the latest technologies gain a clear competitive edge. Beyond speed and cost-effectiveness, the use of advanced technologies also enables firms to enhance their offerings and distinguish themselves.
For instance, manufacturing plants that adopt AI and automation can reduce costs while improving product quality.
6) Intelligence Capacity and Depth: Business intelligence plays a crucial role in data collection, analysis, and strategic decision-making. Deep, insight-driven analysis provides major advantages in understanding market trends and competitor strategies. Effectively harnessing intelligence allows companies to foresee developments and build solid, impactful strategies.
For example, companies that heavily invest in competitor analysis and market research are able to make more informed and grounded strategic moves.
7) Breakthrough Capability: The ability to generate radical, game-changing innovations is a rare and powerful force. It creates differentiation and sets new standards within an industry. Among the seven forces I’ve listed here, this is by far the most difficult to achieve. Not everyone can do it. It requires true vision and the ability to see the big picture. But when someone with that capability also masters the five original Porter forces, they can become world-class entrepreneurs and launch global ventures.
In the tech industry, firms that pioneer breakthrough innovations rise far above their competitors and often become market leaders. Those who achieve breakthroughs create significant differentiation—and in doing so, they carve out a long-term competitive comfort zone. It becomes extremely difficult for others to catch up. If this time is used wisely, these innovators can continue to build on their lead and widen the gap even further.
A Broader Lens for Competitive Analysis
These six additional factors that can be integrated into Porter’s Five Forces model highlight that in today’s globalized and fast-changing markets, competition is shaped not only by traditional elements but also by the strategic capabilities of the players involved. Incorporating these dimensions into Porter’s framework allows for a much broader and more nuanced analysis of competition.
Porter’s classic Five Forces model remains a powerful tool for analyzing industry rivalry and external pressures. However, in today’s rapidly evolving business environment, factoring in these additional forces can help make strategic assessments far more comprehensive. I’ve outlined above how each of the six elements I’ve proposed can be linked to Porter’s model, along with practical examples.
How These Updates Add Strategic Vision
To conclude, I want to emphasize that Porter’s Five Forces still provide a solid foundation for sector analysis. However, the additional factors I’ve discussed—sustainability, agility, access to capital, the use of cutting-edge technology, intelligence capacity, and breakthrough capability—are essential for understanding the modern business landscape in its full complexity. These additions help organizations assess not just their competitive environment, but also their capacity for strategic transformation and innovation.
I believe these insights, which may already have been addressed by other professionals in the field, can be useful for those who place importance on strategy in business. They may also serve as a helpful knowledge base and source of perspective for those pursuing an academic career.
Tag: education
