Porters Five Competive Forces

Topics: Economics, Coffee, FACTOR Pages: 2 (816 words) Published: February 3, 2013
Porters five competive forces is a system that was devised to describe a companies stragetic posistion within a specific market. It is comprised of 5 fores, threat of new entrants, bargaiig power of suppliers, threat of new entrants, bargainig power of suppliers and the competion within the market. The first force, the threat of new entrants is the risk that the company faces when factoring in the posibility of new companies comming in t their market. It is comprised of multiple factors, for example if a company was a leader in their market of the stpe industrythey would need to watch for the possibility of another compay statting up because the the threat is baised o the time and cost of a new companies enty into the markter. Knowlede of the industry is alow a factor and would be a higher factor if the incomming company had previous knowledge of the indutry than someone who proviosle did not work in the field. Another factor is the cost adantages of entering the market, weather the company would make a profit or if the cost of start up is too high. Technology and physical barriers is also a factor, like ddistance is a threat original company has to factor in when concidering the risks. The second force is the barganing power of the suppliers, which is the pull the suppliers have with a company that is buying their raw goods. . This force is a factor of a set of varriables within themselves, including the size of the suppliers and the ability of the company to witch to a subsitute. The unquenes of the raw good recieved from the suppliers is also a major threat. Using our previous example, a company who manufactors staplers is using a compnay that supplies a generic prouct for the stapler body but a unique prodct for the casing that goes over the prouct. the cost for the manufcturing company to switch is higher than staying with the company and paying more for the raw goods. Therefore the supplier has greater bargaining power oer the manufactor. The threadt of...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Porters Five Force Model Essay
  • Porters Five Forces Essay
  • Beyond Porter Five Forces Essay
  • Porters Five Forces Essay
  • Porter Five Forces Essay
  • Porters five Forces and Ryanair Essay
  • Porters Five Forces Essay
  • Porter five forces Essay

Become a StudyMode Member

Sign Up - It's Free