Guide: Porter’s Five Forces
Industry and competition analysis

2
1

3

5

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By Reportlinker.com
All content is protected by copyright, and may not be copied
or distributed in any form without prior ...
What is in this Guide?
What is Porter’s Model?
Porter’s Five Forces Model of Competition
How to use the Porter’s model?
• ...
What is Porter’s Model?
Objectives and Model

4
Four main Objectives of Porter’s Model
To assess and manage the

To identify what factors shape the
character of competiti...
Model of Competition
The power of
industry
competitors

The
bargaining
power of
suppliers

Potential
Entrants

Supplier
Po...
How to use Porter’s Model?
Guide: Answer the following questions
and you will get a detailed and in-depth
analysis of the ...
Calculated Degree of Power
Power

+

-

Competitive Rivalry
Supplier power
Substitute power
Buyers power
Power of new entr...
What is the Rivalry among existing
Competitors?
Competitors
• How many direct or indirect competitors are there?
• What ar...
What are New Entrants Threats?
Production costs
• Are there any economies of scale?
• What are the capital requirements?
•...
What is the Bargaining power of
Suppliers?
Substitution
• What are the switching costs of suppliers and firms in the
indus...
What is the Bargaining Power of
Buyers?
Buyer‘s type
• How strong is the difference between buyer concentration vs. firm
c...
What is the Threat of Substitute
Products?
What is the relative price performance of substitutes?
• What are the prices of...
Case Study: Apple Inc.
Porter’s Five Forces Model applied to
Apple Inc.

14
Potential Entrants
The Government
Marketing and Advertising
regulations, Electronic
device regulaions and
consumer laws

C...
Case Study: Apple Inc.

Ranking of Power and Threats facing Apple Inc.
Power

+

Competitive Rivalry

X

Supplier power

X...
Bibliography
 Porter's Five Forces - Problem Solving Techniques , from

MindTools.com

Porter 5 Forces How they work
What...
Contact

Do you need more info about this guide? Or about a market you are analysing?
• www.reportlinker.com
• + 33 4 37 3...
Thanks for your interest in
ReportLinker.com
Subscribe Now! here

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Porter five forces

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Porter five forces

  1. 1. Guide: Porter’s Five Forces Industry and competition analysis 2 1 3 5 4
  2. 2. By Reportlinker.com All content is protected by copyright, and may not be copied or distributed in any form without prior written permission from ReportLinker. It is for general information use only and is subject to change without notice. We do not guarantee the timeliness, completeness or suitability of the content on this document for any particular purpose. Please contact editorhighlights@reportlinker.com to request reproduction permission. 2
  3. 3. What is in this Guide? What is Porter’s Model? Porter’s Five Forces Model of Competition How to use the Porter’s model? • Table to Calculate the Degree of Power • Competitive Rivalry • Threat of New Entrants • Bargaining Power of Suppliers • Bargaining Power of Buyers • Threat of Substitute Case Study: Apple Inc. Bibliography Contact at ReportLinker.com 3
  4. 4. What is Porter’s Model? Objectives and Model 4
  5. 5. Four main Objectives of Porter’s Model To assess and manage the To identify what factors shape the character of competition within an industry long-term attractiveness of an industry Four Objectives To explain the relationship between the five dynamic forces that affect an industry’s performance To assess the structural attractiveness of the analysed industry 5
  6. 6. Model of Competition The power of industry competitors The bargaining power of suppliers Potential Entrants Supplier Power The threat of substitute products Industry Competitors The threat of new entrants Buyer Power The bargaining power of buyers Substitutes source: Porter, « Competitive Strategy », 1980 6
  7. 7. How to use Porter’s Model? Guide: Answer the following questions and you will get a detailed and in-depth analysis of the competition and industry 7
  8. 8. Calculated Degree of Power Power + - Competitive Rivalry Supplier power Substitute power Buyers power Power of new entrants Guidelines: Fill in the table with crosses by answering the questions from the following sections to measure the degree of power available in the industry. The analysis depends on the number of crosses in each of the boxes. For example: If the competitive rivalry has many crosses in the ‘+’ box, the power of competitors are low, etc. 8
  9. 9. What is the Rivalry among existing Competitors? Competitors • How many direct or indirect competitors are there? • What are the size of my competitors? • How diverse are my competitors? Industry • What is the industry growth rate? • What are the strategic stakes? Products • How different is my product? • What are the buyers’ switching costs? 9
  10. 10. What are New Entrants Threats? Production costs • Are there any economies of scale? • What are the capital requirements? • What is the absolute cost advantage? Brand • How different is the product? • How strong is the brand identity? • How high are the switching costs? Distribution • Is it easy to access distribution channels? • What are the government policies? 10
  11. 11. What is the Bargaining power of Suppliers? Substitution • What are the switching costs of suppliers and firms in the industry? • Is there any presence of substitute inputs? Players • What is the suppliers’ concentration? • How high is the concentration of suppliers? Integration • What is the suppliers’ threat of forward integration? • What is the buyers’ threat of backward integration? 11
  12. 12. What is the Bargaining Power of Buyers? Buyer‘s type • How strong is the difference between buyer concentration vs. firm concentration? • What is the buyer volume? • What are the buyer switching costs relative to the firm’s switching costs? • Is the buyer capable of backward integration? Information • How much information does the buyer have? • Are they attracted by substitutes? • How much does product differences effect the buyer? Brand awareness • How does the buyer judge the brand identity? • How high is the impact of quality/performance? 12
  13. 13. What is the Threat of Substitute Products? What is the relative price performance of substitutes? • What are the prices of my products comparatively? • Are the substitute prices stable? (increase or decrease) How high are the switching costs? • What are the differences relative to my products? • What would the costs incurred be to change my products? What is the buyer propensity to substitute? • What are the buyers preferences on the product category? • What are the differences regarding my products? (quality, prices) 13
  14. 14. Case Study: Apple Inc. Porter’s Five Forces Model applied to Apple Inc. 14
  15. 15. Potential Entrants The Government Marketing and Advertising regulations, Electronic device regulaions and consumer laws Concentration of power in the middle and proximity to the customer Five Forces Model applied to Apple Inc. Threats Suppliers Apple has more power over its suppliers, able to make strong demands P o w e r Industry Apple is strictly focused on design and marketing Threats Substitutes (as far as they exist) Apple is better equipped to compete with horizontal players vs. HP or Sony, not as vertically integrated towards the consumer Source: http://foodandretail.blogspot.com/2007/10/porter-5forces-how-they-work-3.html 15 P o w e r Buyer Vertically orientated towards the customerside, Apple does most of its business in its retail-locations and online stores
  16. 16. Case Study: Apple Inc. Ranking of Power and Threats facing Apple Inc. Power + Competitive Rivalry X Supplier power X, X Substitute power X Buyers power X, X Power of new entrants - X 16
  17. 17. Bibliography  Porter's Five Forces - Problem Solving Techniques , from MindTools.com Porter 5 Forces How they work What is Porter’s 5 Forces Analysis? , from Papers4You.com Michael Porter’s website on Harvard Business School: Faculty and Research Company Profile Apple Inc. , from ReportLinker.com 17
  18. 18. Contact Do you need more info about this guide? Or about a market you are analysing? • www.reportlinker.com • + 33 4 37 37 16 37 • contact@reportlinker.com 18
  19. 19. Thanks for your interest in ReportLinker.com Subscribe Now! here 19
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