Five Forces Model

The Porter's Five Forces Tool

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps to understand both the strength of any organization’s current competitive position, and the strength of a position that the organization considering moving into. With a clear understanding of where power lies, organizations can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of organization’s planning toolkit.

Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However, it can be very illuminating when used to understand the balance of power in other situations.

Porter's 5 Forces are named after Michael E. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. The forces are,

1. Competition in the industry

2. Potential of New Entrants into Industry

3. Power of Suppliers

4. Power of Buyers

5. Threat of Substitute Products

Readymade Garments(RMG) Industry of Bangladesh

Bangladesh, the southern Asian country has a population of approximately 164 million people. The economy of Bangladesh is significantly dependent on agriculture. But it’s a great news for the country that, readymade garments (RMG) sector of Bangladesh has raised as the biggest earner of foreign currency. This sector creates about 4.2 million employment opportunities and contributes significantly to the GDP. Readymade garments (RMG) of Bangladesh is powered by young, urbanizing, workers, where most of them are women.

History of RMG Industry of Bangladesh

The foundation of textile sector was first established in the 60th decade of 19th century. For the first time, the industry exported shirts (Mercury shirt) to the European market in...