If you’ve ever listened to Warren Buffett talk about investing, you’ve heard him mention the idea of a company’s moat. The moat is a simple way of describing a company's competitive advantages. Company's with a strong competitive advantage have large moats, and therefore higher profit margins. And investors should always be concerned with profit margins.

This article looks at a methodology called the Porter’s Five Forces Analysis. In his book Competitive Strategy, Harvard professor Michael Porter describes five forces affecting the profitability of companies. These are the five forces he noted:

1. Intensity of rivalry amongst existing competitors

2. Threat of entry by new competitors

3. Pressure from substitute products

4. Bargaining power of buyers (customers)

5. Bargaining power of suppliers

These five forces, taken together, give us insight into a company's competitive position, and its profitability.

Rivals

Rivals are competitors......

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Title: Porter's Five Forces Analysis
Approximate Word Count: 1000
Approximate Pages: 4 (250 words per double-spaced page)

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