Mapping the terrain

When we set out on a journey it is important to be clear about the kind of terrain we shall be travelling through.

Similarly when planning for a business, it is important to be clear about the environment the business will be travelling through.

Michael Porter identified five key aspects of this in 1979, when he published his now-famous ‘five forces’ model:

1) Industry Competition
2) Customers’ bargaining power
3) Suppliers’ bargaining power
4) New Entrants (to the industry)
5) Substitute products/services

Understand these factors, he said, and you understand the key drivers of profitability for any business.

But wider trends also affect profitability: Political, Economic, Social and Technological trends — the ‘PEST’ model.

At permabusiness we like to update these categories to become:

6) Political/Economic
7) Energy/Environmental
8) Social
9) Technological

Combine these two models (PEEEST and Porter Five Forces) and you have nine key headings that define the ‘environment’ our organisations have to move through.

What do you think are the key drivers under each heading?

We will publish our view before Christmas.

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