What is the purpose of Porter's Five Forces model?

The purpose of Porter's Five Forces model is to analyze industry structure and identify competitive advantage. This framework, developed by Michael Porter, helps businesses understand the competitive dynamics within an industry, allowing them to identify the forces that influence competition and profitability.

The Five Forces model includes the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of competitive rivalry. By examining these forces, a business can determine its position within the industry and develop strategies to enhance its competitive advantage. This analysis helps organizations anticipate changes in their environment and respond effectively, ultimately leading to improved strategic decision-making.

The other options, while they may relate to aspects of strategic management, do not capture the primary focus of the Five Forces model. Understanding internal strengths is related to a different analysis, such as SWOT analysis, while assessing industry changes and evaluating historical performance do not specifically reflect the primary goal of identifying competitive advantage through industry structure analysis.