Much has been talked about the usage of Porter’s Five Forces for analysis of an industry which affects a potential company to be invested in, and it is true that investors need to have sound knowledge of the industry characteristics in order to make informed decisions. However, I realized that I never managed to do a detailed study of the Five Forces and how they impact the study of industries in order for investors to arrive at conclusions regarding the attractiveness of a Company to invest in. Aside from analyzing the fundamentals, financials and prospects (as well as Management quality, of course), I believe the Five Forces framework and model developed by Michael Porter can act as a very good backbone for one to establish a sound investment thesis, provided it is done rigorously and objectively.
This series on Porter’s Five Forces and industry and competitive analysis serves to elucidate ......