Explain Porters five forces theory.
The potters five principle is a useful policy framework for examining and assessing competitive environment of a company, these competitive environments are characterized by the availability of a rival company, potential new market entrants, customers power of suppliers and threats of substitute products. Rival company tends to keep the other company on toes because they know any substandard production impacts negatively on their customer loyalty and has the potential of being overtaken by the rival company. The effects of the rival company is the same that is produced by new market entrants. Lastly, availability of substitute products also gives the company that element of competition that accrue from the rival company.