1 minute read
Porter’s five forces
Power of suppliers
More concentrated than the industry it sells to
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No substitute for what the supplier provides Time 0 3 1 3 2 3 2 Time 5 2 1 4 3 2 1
Supplier does not depend heavily on the industry High swtiching costs
The industry’s products are standardized or undifferentiated
Bargaining power of buyers
Low switching costs in changing vendors
Buyers can credibly threaten to integrate backward
The product it purchases represents a significant fraction of its cost structure
Buyer earns low profits, is strapped for cash, or is otherwise under pressure to trim costs
Supplier can credibly threaten to integrate forward into the industry
The quality of buyers’ products is little affected by the industry’s product
Time 0 4 2 2 1 2 2 2 2 Time 5 4 1 2 1 2 2 2 2
