Model of Porter’s five forces was developed by Professor of Strategy Michael Porter in 1979. Michael Porter assumes that the notion of competition must be enlarged in an industry, and any economic operator may reduce the ability of firms involved to generate profit should be considered as a competitor (Drucker, 1954). Michael Porter identifies five forces that determine strategy and he said the competitive structure of any industry relies on:
- The bargaining power of customers;
- The threat of potential entrants;
- The bargaining power of suppliers;
- The threat of substitute products;
- The intensity of rivalry among competitors.
Configuration, hierarchy and the dynamics of these forces can identify key success factors in the industry, that is to say, the strategic elements must be reduced so that the profit is captured by the five forces to the detriment of the firms involved. It is the mastery of these key success factors that enables companies to achieve a competitive advantage (Bradford and Duncan, 2000). By definition, analysis, the hierarchy of forces and key success factors arising are the same for all firms in an industry presence. The models of Porter’s five forces competitive environment are not characterized by a particular firm. In case of Next clothing, the 5 forces analysis is given below: