3.1.4 Impact of external influences

Question 1

Porters 5 forces

Answer 1

Shows an industry being impacted by 5 sources
Analyses the state of the market
Helps figure out the best strategy to gain a competitive advantage
Can show potential entrants how profitable the market is likely to be
Includes;
- Barriers to entry
- Buyer power
- Supplier power
- Threat of substitutes
- Competitive rivalry

Question 2

Barriers to Entry

Answer 2

New entrants will compete by selling similar products
High start-up costs (eg. expensive equipment) can prevent new firms from entering

Question 3

Buyer power

Answer 3

Buyers want low prices
Negotiate special deals
More power over standardised products

Question 4

Supplier power

Answer 4

Suppliers what to charge as high price as possible
If more customers are buying from them, the more power they have

Question 5

Threat of Substitutes

Answer 5

How likely customers are to buy an alternative
Affects competitiveness
Relative price and quality are important

Question 6

Competitive rivalry

Answer 6

How much competition there is
Intense in a market with lots of equal-sized competitors
Standardised goods have an intense rivalry

Question 7

PESTLE

Answer 7

Political
Economic
Social
Technological
Legal
Environmental