PORTERS 5 FORCES
Suppliers: Here you assess how easy it is for suppliers to drive up prices. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. This is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else. Industry Rivalry: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. But, if no-one else can do what you do, then you can often have tremendous strength. Substitution: This is affected by the ability of your customers to find a different way of doing what you do for example, people may substitute by doing the process manually. If substitution is easy and substitution is viable, then this weakens your power. New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.
Please join StudyMode to read the full document