Five Forces Model

Porter’s Five Force Analysis

Group 1, comprising: Siddharth Sood Deepak Sridhar Sagar Nisha Chaudhary

Porter’s Five Force model

Threat of Substitute

Threat of New Entrants

Bargaining power Of suppliers

Competitive Rivalry Within industry

Bargaining power Of Customer

Threat of New Entrants

  Barriers

to entry: include such factors as capital requirements, economies of scale, product differentiation, switching costs, brand identity, access to distribution channels, and threat of retaliation. The higher the barriers to entry, the higher the potential profitability of the firms in the industry & economies of scale. governing factors include:

  Certain

  The

capital requirement of entry.   Access to distribution channels.   Cost advantages independent of size.   Expected retaliation.   Legislation or government action.   Differentiation.

Competitive Rivalry

  Competitive

rivalry: the intensity of competition depends on a number of factors whether or not a strong industry leader exists, the number of competitors (degree of concentration), the presence of exit barriers, the importance of fixed costs in determining capacity, degree of product differentiation and the growth rate of the industry. rivalry is more fierce and intense when there

  Usually,

is:

v  no

industry leader, v  a large number of competitors, v  high fixed costs, v  high exit barriers,

Bargaining Powers of Suppliers

  Supplier

power is determined by such factors as importance of product to buyer, switching costs, degree of supplier concentration to an industry and the supplier’s ability to enter an industry. power is likely to be high when:

  Supplier

  there

are few suppliers   The cost of switching to another supplier is high.   The brand of the supplier is powerful.   There is a possibility of forward integration by the supplier.

Bargaining Power of Customers

  Buyer

power: The bargaining power of buyers...