Porter’s Five Forces To analyze the competitive market forces and the industry landscape. It helps determine whether the particular industry or a company is attractive.
Suppliers power
Barriers to entry • • • •
• • • •
Economies of scale Legal or regulatory barriers Capital requirements Cost advantage ( i.e. unique access to raw materials) Government policy Strong brand identity Access to distribution channels and shelf space Trade Policies
Intensity of rivalry • • • • •
• • •
ConQuest, IIM Shillong
Shorter supply of supplier’s product or services Differentiation of inputs or presence of substitute inputs Switching costs of suppliers Cost relative to total purchases in the industry Industry members do not account for big fraction of supplier’s sale Suppliers concentration
• • • • • •
Industry growth Product differentiation Low switching cost Fixed costs/value added Brand identity
• • • •
Excess Production Capacity Diversity of competitors Corporate stakes High Exit barriers
Threat of substitutes Relative price performance of substitutes Switching costs Buyer propensity to substitute
2021-22
Buyers power • • • • • • • • •
Buyer are fewer in numbers as compared to manufacturers Buyer purchase volume Lower switching costs Buyer high information Substitute products Less differentiation among products available Brand identity impact on quality/performance Buyer profits Decision maker’s incentives
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