The document discusses two analytical models for understanding industries: Porter's Five Forces and PEST analysis. Porter's Five Forces gauges industry attractiveness based on five competitive forces: threat of new entrants, bargaining power of suppliers and buyers, and degree of rivalry. PEST analysis examines the political, economic, social and technological factors affecting an industry. Understanding external industry factors provides context, shows competitive strengths/weaknesses, and helps strategize by ensuring fit with the external environment.
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