Chapter 3 Flashcards
Porters 5 forces of frameworks
1 Rivalry
2 Entry
3 Substitute
4 supply
5 buyers
Complements
When these are strong the market isn’t attractive to compete in
What should you do if the forces is weak
You should compete in the market and make Strategy to exploit the weak force. But be careful because the industry can change over time
Explain rivalry
A lot of competitors
industry growth rate
High fixed costs
Lack of differentiation
High exit barriers
Explain entrance
High barrier, need a lot of capital/scale or certification to sell products or access to supply and distribution channel
Explain power of buyers
They demand low prices because they buyers are concentrated
low switch costs
if the buyer can supply itself
Low buyer profits
Explain power of supply
Concentrated suppliers
High switch costs
If the suppliers can join the industry themselves
differentiera products
Explain substitute
If they can get a substitute from another industry that will make that industry weak
The industry life cycle, 1
Development = Few organization, differentiated products and the 5 forces is weak which can generate profit
The industry life cycle 2
High growth = Low rivalry and keen buyer which lead to profit, because of no scale economies are achieved yet the entry barriers is low
The industry life cycle 3
Shake out = The rivalry tend to increase and the bad competitors does not make it
The industry life cycle 4
Maturity stage = Scale economies is achieved which means higher barriers of entry, the buyer become more powerful because of the low switch costs and the profit depend on the market share
The industry life cycle 5
The decline stage = High exit costs, high rivalry and if it does not work the remaining company can achieve a monopol
