The five forces model describes what an organization needs to understand in order to be able to compete in the market. The model makes use of the following arguments:$-$

$1.$ Bargaining Power of Suppliers

This describes the position of the suppliers and how the negotiation power lies with them when I make the use of specific suppliers in the specific industry.

An example can be taken as a general parts manufacturers in the automotive industry, the unique position they hold allow them to make the use of the active competition in order to negotiate better prices for their offerings.

$2.$ Bargaining Power of Customers

This happens in a consumer dependent industry. For example, we can say that the apparel industry works within a specific market based on the trends and the trends are set by the consumers, this would provide the consumers to create specific demand and make the use of their bargaining power.

$3.$ The threat of New Entrants

This happens in an industry where there is competition based on the products and how and new products can shift the power dynamics in the industry.

For example, Apple brought the iPad in the market while Samsung brought their galaxy tab range, while there was an active competition in the market already, Lenovo entered the market with their tablet range creating what we can understand as being a new entry.

$4.$ Threat of Substitutes

This is a factor in the market where the competition can be further intensified by another entry which essentially provides the consumers a better value for money product easily creating a threat of substitution.

For example, we can take the mobile device industry, Apple has enjoyed a position of market leadership earlier when there were no active products that could compete with their product range but now companies such as Samsung and OnePlus poses a threat for their market.

$5.$ Competitive Rivalry between Existing Players

The easiest way to understand this dynamic is between Apple and Samsung who have been actively involved in a competition based n their current offerings. Both companies compete in a similar market, with similar differentiation strategy and similar products.

The only way to enter such a market is through either accepting the competition or differentiating from it$,$ into a different service or product base.