Question

Which of porters five forces is most impactful and why?

Answer 1

Porter's five forces are:

• Competitive rivalry in an industry
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of new entrants
• The threat of substitutes

Out of these five forces, I think 'threat of substitutes' is the most impactful. The other forces can reduce profitability. However, suitable substitutes can completely push a company out of businesses by making the products or the services of the company completely redundant. For example, Xerox faced the same existential crisis as its photographic film businesses have been seriously threatened by digital photography. Therefore, the threat of substitutes is the most powerful out of the five.