Concerns the microenvironment – and affect a business’s firm’s ability to serve its customers and make a profit. They consist of the: bargaining power of suppliers bargaining power of buyers (customers); threat of substitutes (rival products / services); threat of new entrants (barriers to entry); degree of rivalry (intensity of competition). The model can be used by the individual business manager to increase their understanding of factors affecting the industry within which the business operates, and help to make appropriate decisions over how to improve the business’s competitiveness. Used to understand factors affecting the industry within which firm operates, help decisions over how to improve competitiveness.