Porter's Five Forcers
- Created by: javiernewton
- Created on: 12-05-17 09:49
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- Porter's Five Forces
- Barriers to Entry
- How easy it is for new firms to enter the market
- It is in the interests of existing firms in the market to make it hard for new firms to get in
- Strategies to create barriers to entry
- Take control of distribution channels (forward vertical integration) Makes the channel unavailable for new entrants and makes the market less attractive
- Patents or trademarks can be used to make it harder for new entrants to sell similar products
- Buyer Power
- Buyers want products at as low a price as possible
- Buyers have lots of power when there are many sellers within the market
- Threat of Substitutes
- How likely customers are to buy alternative products
- Price and quality are important as buyers are unlike to buy a product with poor quality
- Strategies to reduce the threat of substitutes
- Businesses can make it expensive or difficult for customers to switch to a substitute
- Companies can differentiate products in order to create a brand loyalty
- Businesses can identify a group of customers whose needs are not being met and then market a product to suit them
- Rivalry Within the Industry
- How much competition there is
- Industries with high fixed costs are very competettive
- Barriers to Entry
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