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Environmental influences

External analysis

1.1 Introduction

There are two models available for considering the impact of external factors on
performance:

 Porter’s 5 forces – focus is on industry level

 PEST analysis – focus is on the macro environment

1.2 Porter’s 5 forces

 Industry attractiveness depends of five forces

 The stronger the force, the lower the attractiveness (and potential profitability) of
the industry.

Threat of
new entrants

Power of Competitive Power of

buyers rivalry customers

Threat of
substitutes

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