Six forces model
The six forces model is an analysis model used to give a holistic assessment of any given industry and identify the structural underlining drivers of profitability and competition. The model is an extension of the Porter's five forces model proposed by Michael Porter in his 1979 article published in the Harvard Business Review "How Competitive Forces Shape Strategy". The sixth force was proposed in the mid-1990s. The model provides a framework of six key forces that should be considered when defining corporate strategy to determine the overall attractiveness of an industry. The forces are: Although there  are a number of factors that can impact profitability in the short term – weather, the business cycle – an assessment of the competitive forces in a given market provides a framework for anticipating and influencing competitiveness and profitability in the medium and long term. History. The model is an extension of Porter's five forces model (1979). The extended model including the sixth force, complementary products, and was proposed in the 1990s. Six forces. Competition. There are several dimensions that rivals within an industry can compete on – price discounting (cost leadership strategy), introduction of new services/ products (innovation strategy), improvement of  service quality (customer-orientation strategy) etc. High competition between rivals can stifle an industry's profitability. Intensity of competition is highest if: While non-price based competition can sometimes escalate to a level at which it starts to undermine industry profitability, it is less likely to happen than price rivalry and can also be valuable to a given industry. Competing in areas such as product features, customer support, delivery time, and brand image isn't likely to be as damaging to profits because it will increase customer value in the product or service and may help establish customer loyalty. This  in turn can improve industry profitability through increasing value relative to substitutes and raising the barriers of entry for new potential competitors. New entrants. New entrants put pressure on current organisations within an industry through their desire to gain market share. This in turn puts pressure on prices, costs and the rate of investment needed to sustain a business within the industry. The threat of new entrants is particularly intense if they are diversifying from another market as they can leverage existing expertise, cash flow and brand identity as it puts a strain on existing companies profitability. Barriers to entry  restrict the threat of new entrants. If the barriers are high, the threat of new entrants is reduced and conversely if the barriers are low, the risk of new companies venturing into a given market is high. Barriers to entry are advantages that existing, established companies have over new entrants. According to Porter, there are 7 major barriers: End users/buyers. Powerful customers can play different companies off against each other in order to drive price down or demand a high quality of service. Bargaining power is high in a customer group if: Suppliers. Powerful suppliers (e.g. labour suppliers) can  influence profitability of an industry though charging higher prices, limiting service quality or by shifting costs to the industry participants. A supplier group is powerful if: Substitutes. A substitute product is something that fulfils the same function or a similar function to a given industry product e.g. using Skype is a substitute to travelling for a meeting. Substitutes are often overlooked as they can appear to provide something completely different but they need to be considered when thinking about overall competitiveness of a company. When the threat of substitutes is high, industry profitability suffers. The threat of substitutes is high  if: Complementary products. This force was the sixth force, added in the revised 1990s model. It refers to products or services that are compatible with what a particular industry sells. The effect of complementary goods on an industry's profitability generally depends on how reliant the product or service is on the compatible product. If one cannot function without the other, the impact is high. The impact of complementary products can be good or bad for industry profitability. If the complementary good is doing well within its industry this can have a positive effect on the profitability of a  given company. Adversely, if performance is bad or prices rise within the complementary product's market it can negatively impact upon the level of profit that the industry can obtain. For example, when petrol costs rise the public transport industry may suffer reduced profits or be forced increase prices which may cause customers to look for alternatives, e.g. walking and car sharing, again reducing overall profitability of an industry. Usage. The model is used to identify a firm's strategic position through looking holistically at the forces that effect the industry. It is a framework that helps companies identify threats  and evaluate the best strategy to move forward with to increase profitability and competitiveness. Criticisms. The six force model was not as widely adopted as its predecessor. The revised framework has been challenged by academics and strategists such as Kevin P. Coyne and Somu Subramaniam who have stated that three dubious assumptions underlie the forces: Other criticisms include: