Theory of Competitive Strategy Introduction The theory of competitive strategy was developed by Michael Porter in 1979 to describe the factors that determine the success of any business (GNU, 2012). These factors would affect ability of organizations to offer services to stakeholders who have direct impact on the profits made. The theory describes influences by buyers, suppliers, new entrants, substitutes and the competition in the industry. Buyers and sellers’ influence is through bargaining power while new entrants or availability of substitutes would pose a threat to a business success. The combination of these four factors would imply competition among existing firms.