3.1.4 - Porter's Forces

Question 1

What are Porter’s 3 Forces?

Answer 1

1. Differentiation
2. Niche Markets
3. Price Leadership

Question 2

What are Porter’s 5 Forces?

Answer 2

1. Threat of New Entrance
2. Power of Buyers
3. Power of Suppliers/Sellers
4. Competitive Rivalry
5. Threat of Substitutes

Question 3

What is an Example for Each of Porter’s 5 Forces?

Answer 3

1. Gucci vs Supreme
2. Internet vs High-Street
3. Coca Cola vs Virgin Cola
4. Apple vs Samsung
5. Off Branding

Question 4

What is the Impact of Porter’s 5 Forces?

Answer 4

Each of the forces will affect the profitability of a business and therefore can be used to analyse their position in the market

Question 5

What is the Impact of a New Entrance?

Answer 5

New entrants take market share from other businesses and can saturate the market

Question 6

Define Barriers to Entry

Answer 6

Any factors that stop a business from entering a market. But, they often only exist in duopoly or oligopoly markets

Question 7

What is the Impact of Buyer Power?

Answer 7

Large businesses often have the economies of scale to become major customers in their own right and can influence the prices they pay

Question 8

What is the Impact of Supplier Power?

Answer 8

Suppliers can have little competition, few substitutes or have exclusive access to a supply and therefore can greatly control their prices

Question 9

What is the Impact of Competitive Rivalry?

Answer 9

Prevents the formation of a dominant business that can use monopolistic powers to control the market through influencing competitors and controlling prices

Question 10

What is the Impact of Substitutes?

Answer 10

Similar products from another industry can offer desirable USPs, better value or greater quality and so can draw market share from competitors