porters 5 forces Flashcards

1
Q

what is potters five forces

A

considers the nature and forces of competition within an industry

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2
Q

uses of porters

A

assessing which companies have power within the industry (assessment do moving into a new market)
-if active in an industry, who holds the power balance, firm can then develop strategies and tactics in attempts to make itself more power in relation to competitors

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3
Q

what is supplier power

A

-relationship of company with suppliers ie may be reliant so therefore the supplier holds the power within the relationship
-may have more power when there are fewer supplies in an industry, can’t easily switch, giving the power to control prices within the relationship
-supplier may also be unique, USP
-strategies:
considering integration and mergers to address power balance
maximising upon EoS, makes the business a bigger customer to the supplier, more attractive to keep
trying to seek out new suppliers- difficult, looking at other similar firm, may be able to approach and ask them to supply them

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4
Q

what is buyer power

A

-some businesses have power over their consumers,able to set prices
-some cases the power is reversed
-buyers can easily switch, have to make them loyal
stratergies:
- trying to seek new markets and new segments to widen the consumer base, less reliant on original customer base
-differentiating products, makes customers less easy to sell- more attractive
-driving rivals out of the market place such as price wars and promotional tactics, less choice and less comp

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5
Q

entry threats

A

-power threats of new entrants
-in saturated markets with established market leaders it can make it difficult for new firms to establish and enter
-in some markets firms are powerless and therefore new businesses can easily enter
-new entrants take profit and market share that make a business less powerful entity
strategies:
-barriers to entry that deter new entrants, strengething barriers to entry to the reduce the threat of possible new competition
- patents
-max EoS- cheaper unit costs, lower prices that new businesses can’t meet
-strengthening a brand name and creating a loyal consumer base, unlikely to switch to new businesses

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6
Q

direct rivalry

A

-relationships between us and rivals and discuss the balance of power
-level of dominance
-price wars, promotion
-this can damage profits or increase the costs (intense rivalry)
stratergies
- being the most powerful to reduce pressure on costs and profits
-using differentiation, benefitting from low costs

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7
Q

threat of substitutes

A

-substitutes in other markets, as well of having to compete with direct rivals also have to compete with firms in other industries
strategies
-strong brand name, trust,loyalty
-promotional activity
-low cost producers strategies- low prices for consumers, let motivation for what they could possibly substitute

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8
Q

necessary steps to success

A

-investigating the power within all of these cases and assessing the relationships and take action to put the firm in a more dominant position which could be advantageous

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