Porters Five Forces

What are the FIVE FORCES?

• Entry Threat (barriers to entry)
• Buyer Power
• Supplier Power
• Rivalry- degree of and power of COMPETITORS
• Substitute threat

Horizontal competition looks at THREATS from COMPETITORS-

• ENTRY THREAT- The LIKELIHOOD of a new business joining the industry.
• THREAT OF SUBSTITUTE PRODUCTS- The likelihood of new products being introduced into the market. Are there barriers from stopping this from happening?
• THE INTENSITY OF COMPETITIVE RIVALRY- How agressive is the competition? This depends on the amount/concentration of businesses in the market.

Vertical competition looks at threats from Suppliers and Customers-

• THE BARGAINING POWER OF SUPPLIERS- What power do suppliers have over businesses that they supply to? For example- A supplier has a better deal somewhere else so it can ask for a better deal.
• THE BARGAINING POWER OF CUSTOMERS- What power to customers have over businesses that they buy from?