Scribd
Upload
22 views10 pages

Porters Five Forces

Michael Porter's Five Forces model analyzes competitive rivalry and industry profitability. The five forces are: the threat of new entrants, the power of suppliers and buyers, and the threat of substitute products. According to the model, an industry's profit potential is determined by the intensity of competitive rivalry, which is influenced by barriers to entry, supplier and buyer power, and the threat of substitutes. The model can be used to analyze an industry's structure and strengths and weaknesses.

Uploaded by

Arun Kumar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
22 views10 pages

Porters Five Forces

Michael Porter's Five Forces model analyzes competitive rivalry and industry profitability. The five forces are: the threat of new entrants, the power of suppliers and buyers, and the threat of substitute products. According to the model, an industry's profit potential is determined by the intensity of competitive rivalry, which is influenced by barriers to entry, supplier and buyer power, and the threat of substitutes. The model can be used to analyze an industry's structure and strengths and weaknesses.

Uploaded by

Arun Kumar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 10

Michael Porter’s

Five Forces
Model
Michael Porter …

“An industry’s profit potential


is largely determined by the
intensity of competitive
rivalry within that industry.”
Porter’s Five Forces
Porters Five Forces …
* Threat of Entry
* Bargaining Power of Suppliers
* Bargaining Power of Buyers
* Development of Substitute
Products or Services
* Rivalry among Competitors
Barriers to Entry …
… large capital requirements or the need
to gain economies of scale quickly.
… strong customer loyalty or strong
brand preferences.
… lack of adequate distribution channels or
access to raw materials.
materials
Power of Suppliers …
… high when
* A small number of dominant, highly
concentrated suppliers exists.
* Few good substitute raw materials or
suppliers are available.
* The cost of switching raw materials or
suppliers is high.
Power of Buyers …
… high when
* Customers are concentrated,
concentrated large or buy in
volume .
* The products being purchased are
standard or undifferentiated making it easy to
switch to other suppliers.
* Customers’ purchases represent a major
portion of the sellers’ total revenue.
Substitute products …
… competitive strength high when
* The relative price of substitute products
declines .
* Consumers’ switching costs decline.
decline
* Competitors plan to increase market
penetration or production capacity.
capacity
Rivalry among competitors
… intensity increases as
* The number of competitors increases or
they become equal in size.
size
* Demand for the industry’s products
declines or industry growth slows.
slows
* Fixed costs or barriers to leaving the
industry are high.
high
Industry & Product
Life Cycles

You might also like