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    Porters Five Forces

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    Ariel Tupaz

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    © All Rights Reserved
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    Porters Five Forces

    Uploaded by

    Ariel Tupaz
    3 views11 pages

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    Porters_Five_Forces

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    Copyright:

    © All Rights Reserved
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    3 views11 pages

    Porters Five Forces

    Uploaded by

    Ariel Tupaz

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    PORTERS FIVE FORCES

    INTRODUCTION
     ABOUT THE FIVE FORCES : developed by
    HBS Prof Michael Porter in 1979
     A tool used to understand, assess and analyze a
    business’ competitive position.
     Shows where an industry’s competitive
    strength lies
     Framework for industry and business
    development
    PORTERS FIVE FORCES
    diagram
    THREATS OF NEW ENTRANTS
     Ability of new firms to successfully enter the
    market (level of barriers of entry)
     Driven by :economies of scale, government
    influence, capital requirement, cost of entry.

     STRATEGY:
     Differentiation: branding, quality, availability.
     Cost leadership: reducing cost to discourage
    new entrants.
    BARGAINING POWER OF BUYERS
     The ability of buyers to drive down prices, play
    competitors against each other .
     Driven by: the number/power of buyers, concentration
    of buyers, Information available to buyers,
    availability of substitutes.

     STRATEGY: loyalty promotions, broaden channels of


    distribution.
    BARGAINING POWER OF SUPPLIERS
     Suppliers ability to increase price or reduce
    quantity.
     Driven by :Supplier concentration, existence of
    monopoly, differentiation of inputs, ease of
    switching suppliers

     STRATEGY: supplier flexibility(relationship


    with many wholesalers), backward integration
    COMPETITIVE RIVALRY
     Intensity of competition among existing
    competitors.
     Driven by :size/strength of competitors , low
    entry barriers, high growth industry, high exit
    barriers and high fixed cost.

     STRATEGY: reduction sales, modifications,


    increase marketing/advertising.
    THREATS OF SUBSTITUTE
     Existence of a product outside of the realm of a
    common product.eg Coke, Pepsi vs. Water.
     Driven by: number of available substitute, cost
    of switching, buyer inclination to substitute,
    performance of substitutes
     STRATEGY: differentiating to meet various
    market segments.
     Diversification.
    STRENGTH & WEAKNESSES OF THE
    FORCES
     STRENGTHS:
     Relatively simple to conceptualize, it appeals to managers & can
    be used as a checklist, It is essential in identifying key
    competitive forces affecting a business.
     It is used for predictive future industry structure/developing
    future competitive strategies.

     WEAKNESSES/CRITICS:
     Approach can be costly for small business to use(research cost).
     Lacks impact of strategic alliances.
     Presence of governmental regulation in the market effects the
    models' reliability.
    SUMMARY

     It is important that one analyses the firm’s


    position in the industry and adopt a strategy
    that will best fit in the situation.
     It also affords the firm the ability to identify its
    competitive strength to overcome weakness
    and threats to develop opportunities.
    QUESTIONS

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