Five Force Model Analysis
Hindi Film Industry
Table of Contents
| Porter’s 5 Force Model
| 3 - 5
| Industry Brief
| 5 – 6
| 5 Force Model Analysis
| 7 – 8
Five Forces Analysis
It helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. Five forces analysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. The threat of entry
Economies of scale e.g. the benefits associated with bulk purchasing. * The high or low cost of entry e.g. how much will it cost for the latest technology? * Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? * Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects. * Will competitors retaliate?
* Government action e.g. will new laws be introduced that will weaken our competitive position? * How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitises the influence of the environment. * This is high where there a few, large players in a market e.g. the large grocery chains. * If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains. * The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another. The power of buyers
The bargaining power of customers is described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. * Buyer concentration to firm concentration ratio
* Degree of dependency upon existing channels of distribution * Bargaining leverage, particularly in industries with high fixed costs * Buyer volume
* Buyer switching costs relative to firm switching costs
* Buyer information availability
* Ability to backward integrate
* Availability of existing substitute products
* Buyer price sensitivity
* Differential advantage (uniqueness) of industry products The threat of substitutes
* Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists. * Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. * We could always do without e.g. cigarettes.
The power of suppliers.
* The power of suppliers tends to be a reversal of the power of buyers. * Where the switching costs are high e.g. Switching from one software supplier to another. * Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft. * There is a possibility of the supplier integrating forward e.g. Brewers buying bars. * Customers are fragmented (not in clusters) so that they have little...
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