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A Porter's five forces analysis can complement other techniques, like a SWOT analysis. A SWOT analysis focuses on the company, while a Porter's five forces analysis looks at the external factors impacting on a company.

* Porter's five forces are listed in the left margin. Degree of Rivalry is emboldened because it is the central force, which involves all the other forces.

Classical economics predicts that rivalry between companies should drive profits to zero. This is part of the threat of substitutes. For instance, Tesco has competition from companies from Sainsbury that can provide substitutes for their goods. This drives the prices of groceries down in both companies.

Buyer power also acts to force prices down. If beans are too expensive in Tesco, buyers will exercise their power and move to Sainsbury. Fortunately for Tesco, there are few other large supermarket companies. This means the market is disciplined — the supermarkets have a disciplined approach to price......

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Approximate Word Count: 475
Approximate Pages: 2 (250 words per double-spaced page)

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