arvind jakharppt

8/3/2019 arvind jakharppt

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Prepared by:- Arvind Mehta(02)

Vivek Gupta(25)

Rohit Kumar(31)

Akhil Shah(36)


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An industrys profit potential is largely

determined by the intensity of competitive

rivalrywithin that industry

MICHAEL PORTER


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The model of the Five Competitive Forces wasdeveloped by Michael E. Porter

An important tool for analyzing an organizations

industry structure in strategic processes.

These forces determine the intensity of competitionand hence the profitability and attractiveness of an

industry impact on a companys ability to compete in a

given market.


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Porters 5 Forces Model


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The term 'suppliers' comprises all sources forinputs that are needed in order to providegoods or services

Supplier bargaining power is likely to be

high when:-

The market is dominated by a few largesuppliers rather than a fragmented source ofsupply

There are no substitutes for the particularinput

Employee solidarity

bargainingpower ofSupplier


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Determines how much customers can

impose pressure on margins andvolumes.

Monospony

Customers bargaining power is likelyto be high when

Buyers are concentrated Buyers purchase significant

proportion of production

The customer knows about theproduction costs of the product

Low when

Producer threaten forward integration

Producer supply critical of buyersinput

bargainingpower of buyers


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The threat of new entries willdepend on the extent to whichthere are barriers to entry .These are,

High initial investments and fixedcosts

Brand loyalty of customers

Scarcity of important resources,e.g. qualified expert staff

Existing players have closecustomer relations

Threat ofNew Entrants


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A threat from substitutes exists ifthere are alternativeproducts with lower prices ofbetter performanceparameters for the same purpose

The threat of substitutes isdetermined by following factors

Brand loyalty of customers

Close customer relationships

Current trends.

Threat ofSubstitutes


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This force describes the intensity ofcompetition between existing players(companies) in an industry

Competition between existing playersis likely to be high when

There are many players of about thesame size

Players have similar strategies

There is not much differentiationbetween players and their products

Competitive Rivalrybetween ExistingPlayers


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Thus, Porters Model of Five CompetitiveForces is a simple but powerful tool forunderstanding where power lies in a businesssituation.

It helps to understand both the strength ofyour current competitive position & the

strength of a position you are looking tomove into.


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THANK YOU

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