Porters Five Forces
- Created by: Jess
- Created on: 01-12-12 17:51
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- Porters Five Forces
- Porters Five Forces analyses the competitive environment that a business is facing.
- 3. Buyer/Consumer Power
- The influence of the end user.
- The higher the buyer power, the lower the potential for setting prices and increasing profits
- Examples
- Buyer volume- are the buying in bulk?
- Availability of substitutes
- Brand identity & customer loyalty
- 1.Barriers to Entry
- Factors that prevent new competition from entering the market.
- Examples
- Economies of Scale
- Government policy
- Strong brand identity
- Access to factors of production
- 2. Supplier Power
- The higher the supplier power, the lower the potential profits
- Examples
- costs of switching to a new supplier
- the number of alternative suppliers
- availability of alternative inputs
- 5. Threat or risk of substitutes
- Is there a possibility that buyers will switch to an alternative?
- Rate of change of technology.
- Switching costs for customers
- Level of substitution effect
- 4. Level of Competition
- The lower the level of competition, the higher the profit margins
- Strength of brands
- Level of collusion
- Industry Concentration
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