Porters 5 forces

Question 1

Why should you use porters 5 forces?

Answer 1

To understand the strength of your current competitive positioning the strength of a position you’re considering moving into

Question 2

What are the the porter’s 5 forces?

Answer 2

1. Competition in industry
2. Threats of new entrants into industry
3. bargaining power of suppliers
4. bargaining power of customers
5. threat of substitute products

Question 3

Describe threats of new entrants?

Answer 3

How big the threats off new entrants are will be affected by:

1. The barriers to entry the market
2. Government policy
3. Capital requirements
4. Economies of scale
5. product differentiation
6. brand equity
7. customer loyalty
8. Industry profitability
9. Network effect

Question 4

Describe Threat of substitutes?

Answer 4

Threat that customers will use a different technology to solve the same need, kind of like indirect competitors. Threat of substitutes will depend on:

1. relative price performance of substitute
2. brand loyalty
3. perceived level of product differentiation
4. number of substitute products available on the market
5. ease of substitution
6. availability of close substitute

Question 5

Describe bargain power of customers?

Answer 5

The ability for the customer to put pressure on the firm. It’s affected by:
1. if the number of competitors/alternatives are high
2. buyer price sensitivity
3. differential advantage
4.

Question 6

Describe bargain power of the suppliers?

Answer 6

When there are few supplier substitutes, the supplier can have high power over the firm. Factors affecting this are:

1. Precense of substitutes
2. Supplier concentration
3. strength of distribution channel

Question 7

Decribe Competetive rivalty!

Answer 7

A firm has to be aware of its competitors. Factors defining position against competitors are:

1. innovation
2. level of adverising expense
3. competetive market place