Industry Structure - Porter's Five Forces

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STUDENT HAND-OUT

WORKSHEET ON INDUSTRY STRUCTURE

This worksheet was developed to apply Porter’s Five Forces analysis to an industry. For each of the factors listed below, place an “X” in the appropriate column (Yes, No or Moderate). Once you have completed the analysis of the five forces, compute the number of factors for each category, and write down the number for the overall analysis.

1. Threat of entrants:

|+ factors (favorable to industry) |Yes |Mod |No | |- factors (unfavorable to industry) |(+) | |(-) | |Do large firms have a cost or performance advantage in your segment of the industry? |+ | | | |Are there any proprietary product differences in your industry? | |x | | |Are there any established brand identities in your industry? |+ | | | |Do your customers incur any significant costs in switching suppliers? | | |- | |Is a lot of capital needed to enter your industry? |+ | | | |Is serviceable used equipment expensive? |+ | | | |Does the newcomer to your industry face difficulty in accessing distribution channels? | | |- | |Does experience help you to continuously lower costs? | |x | | |Does the newcomer have any problems in obtaining the necessary skilled people, materials or supplies? | | |- | |Does your product or service have any proprietary features that give you lower costs? | | |- | |Are there any licenses, insurance or qualifications that are difficult to obtain? | |x | | |Can the newcomer expect strong retaliation on entering the market? | |x | |

Worksheet on Industry Structure (continued)

2. Bargaining power of buyers:
(To what extent are your customers locked into you?)

|+ factors (favorable to industry) |Yes |Mod |No | |- factors (unfavorable to industry) |(+) | |(-) | |Are there a large number of buyers relative to the number of firms in the business? |+ | | | |Do you have a large number of customers, each with relatively small purchases? |+ | | | |Does the customer face any significant costs in switching suppliers? | | |- | |Does the buyer need a lot of important information? | |x | | |Is the buyer aware of the need for additional information? | |x | | |Is there anything that prevents your customer from taking your function in-house? | |...
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