Porters 5 Forces
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Porters five forces
Porters five forces are used for analysis of external environment. Analysis is done for judging the industry attractiveness from an Incumbent point of view. In Porters five forces framework, we assess the external environment on following heads.
Overall assessment
Intensity for rivalry
the threat of entry
bargaining power of buyers
bargaining power of suppliers
the threat of substitutes
Assessment along these heads can be further done by judging the attractiveness of an industry on following sub heads.
The Threat of Rivalry
The Threat of Rivalry(PART A)
Number of competitors
Industry growth
Fixed cost/storage cost
Differentiation
Switching cost
Openness of terms of sale
Excess capacity
Strategic stakes
The threat of rivalry -Barriers to exit (PART B)
Asses specialization
Fixed cost of exit
Govt. Restrictiveness
The threat of entry
Economies of scale
Product differentiation
Brand identity
Customer switching cost
Access to channels of distribution
Capital requirement
Access to technology/ know how
Access to raw materials
Govt. policy/protection
The bargaining power of buyers
Number of buyers
Availability of substitutes
Switching costs
Buyers threat of backward integration
Industries threat of backward integration
Contribution to quality
contribution to cost
Buyers profitability
The bargaining power of suppliers
Number of suppliers
availability of substitutes
switching cost
suppliers threat of forward integration
Industrys threat of backward integration
contribution to quality
contribution to cost
Industrys Importance to supplier
The threat of substitutes
availability of close substitutes
switching cost
substitutes