7.7 Competitive Environment Flashcards
1
Q
What is Porter’s 5 forces
A
A model that allows you to analyse the competitiveness of a business environment
2
Q
What is in the middle of the diagram
A
Rivalry between existing competitors
3
Q
What arrows point towards the middle
A
- Barriers to entry
- Buyers’ bargaining power
- Suppliers’ bargaining power
- Threat of substitutes
4
Q
What is bargaining power
A
- More supplier power = less attractive as suppliers can charge higher prices
- If there is 1 supplier, they are likely to have more power than if there are 100 suppliers
5
Q
Advantages of Porter’s 5 forces
A
- Understand the competitiveness of a market and make decisions about their own competitiveness
- Allows new entrants to consider how profitable a market may be
- It is a good framework to analyse SWOT
6
Q
What market has a high barriers to entry
A
The technology market - start up costs are very high
