Competition

• Porters five forces Theory = helps strategists understand what makes an industry profitable and provides insights needed to make strategic choices.
• What are porters five forces ?:

  • Threat of new entrants.
  • Bargaining power of buyer
  • Bargaining power of suppliers
  • Threat of new substitutes
  • Competitive rivalry

  
• Industry rivalry (PFF)

  • number of competitors
  • diversity of competitors
  • Industry concentration
  • Industry growth
  • quality differences
  • Brand loyalty
• Bargaining power of suppliers (PFF)

  • Number and size of supplier
  • Uniqueness of each suppliers product
  • focal company's ability to substitute
• Threat of substitute products (PFF):

  • Number of substitute products available
  • buyers propensity to substitute
  • relative price of the substitute
  • perceived level of product differentiation
  • switching costs
• Bargaining power of Buyers (PFF):

  • number of customers
  • price sensitivity
  • buyers ability to substitute
  • difference between competitors
• Threat of new entrants (PFF):

  • Barriers to entry
  • economies of scale
  • brand loyalty
  • capital requirements
  • access to distribution channels