Six-Force Model

AAA

DEFINITION of 'Six-Force Model'

A design used to show how companies or industries are affected by external factors. The six-force model expands on Harvard Business School professor Michael Porter's five-force model with the addition of "complementors," or companies that produce closely related products or services, as a sixth factor.

INVESTOPEDIA EXPLAINS 'Six-Force Model'

The five-force model on which the six-force model is based describes the impact of existing rivals, bargaining power of customers, bargaining power of suppliers, substitutes and new entrants on a business or industry's success. These models can be used to analyze a business or industry's current position and its competitive advantage (or lack thereof).

RELATED TERMS
  1. Absolute Advantage

    The ability of a country, individual, company or region to produce ...
  2. National Diamond

    A theory of competitive advantage developed by Harvard Business ...
  3. Knowledge Capital

    An intangible asset that comprises the information and skills ...
  4. David Ricardo

    A classical economist known for his Iron Law of Wages, labor ...
  5. Porter's 5 Forces

    Named after Michael E. Porter, this model identifies and analyzes ...
  6. Comparative Advantage

    The ability of a firm or individual to produce goods and/or services ...
RELATED FAQS
  1. Does perfect competition exist in the real world?

    First, let's review what economic factors must be present in an industry with perfect competition: 1. All firms sell an ... Read Full Answer >>
  2. Which of these is not one of Porter's 5 competitive forces?

    Which of these is not one of Porter's 5 competitive forces? a) Threat if new entrantsb) Threat of subsitute goodsc) Rivalry ... Read Full Answer >>
  3. What is the difference between the cost of capital and the discount rate?

    The cost of capital refers to the actual cost of financing business activity through either debt or equity capital. The discount ... Read Full Answer >>
  4. How does the market share of a few companies affect the Herfindahl-Hirschman Index ...

    In economics and commercial law, the Herfindahl-Hirschman Index (HHI) is a widely used measure that indicates the amount ... Read Full Answer >>
  5. What does the rule of 70 indicate about a country's future economic growth?

    The rule of 70 could be used to indicate the approximate number of years that it would take a company's economic growth to ... Read Full Answer >>
  6. How is the rule of 70 related to the growth rate of a variable?

    The rule of 70 is related to the growth rate of a variable because it uses the growth rate in its approximation of the number ... Read Full Answer >>
Related Articles
  1. Active Trading

    Competitive Advantage Counts

    What's the best indicator of a company's future success? Its ability to succeed when others fail.
  2. Entrepreneurship

    10 Breakout Ideas For Small Businesses

    If your business has hit a wall, we've got the answer to break through and increase sales and earnings.
  3. Entrepreneurship

    9 Tips For Growing A Successful Business

    Give your business what it needs to thrive and it will reward you for years to come.
  4. Economics

    Explaining Financial Analysis

    Financial analysis is a general term that refers to using financial data to make business and investment decisions.
  5. Professionals

    What Does a Chief Operating Officer (COO) Do?

    The Chief Operating Officer (COO) is usually considered the second-in-command at most corporations.
  6. Entrepreneurship

    What is a Business?

    As a general term, business means the commercial activities of an individual or group engaging in some type of financial transaction.
  7. Fundamental Analysis

    Calculating Future Value

    Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.
  8. Economics

    What is Deadweight Loss?

    Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
  9. Economics

    How to Do a Cost-Benefit Analysis

    The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted.
  10. Economics

    What's Involved in Customer Service?

    Customer service is the part of a business tasked with enhancing customer satisfaction.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center