Porters Five Forces

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  • 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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