Porter's 5 forces model

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Porter's 5 forces model

  1. 1. PORTER’S 5 FORCES MODEL 1
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  4. 4. RETAILING INDUSTRY 4
  5. 5. THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTES • Independent retailers decreased. • Deal with various products. • Chain stores • Chances of shifting is high. • Centralized buying competitive advantage POWER OF SUPPLIERS POWER OF BUYERS • Historically, exploit the relationship. • Lower bargaining power • Less power • High quality products – retailers’ honest RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Cut throat Competition • Reduce – frequent fliers, memberships, loyalty cards, etc.. 5
  6. 6. TELECOMMUNICATION INDUSTRY 6
  7. 7. THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTES • Ownership of a telecom license • Cable TV – direct lines, broadband services • Finance POWER OF SUPPLIERS POWER OF BUYERS • Less power • Increased choice – high bargaining power • Talented managers & engineers • Switching costs – individual & large business customers. RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Usage of phone, competition is high • Price • Value added services • Profitability low 7
  8. 8. Airline Industry 8
  9. 9. THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTES • Saturated Market • Time, Money • Brand Name & Recognition • Personal References & convenience POWER OF SUPPLIERS POWER OF BUYERS • Dominated – Boeing & Airbus • Low bargaining • Not much of difference. • Consider Service of airline too. RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • High competition • Cut throat competition • Low Profitability 9
  10. 10. Pharma Industry 10
  11. 11. THREAT OF NEW ENTRANTS THREATS OF SUBSTITUTES • Very low barriers to entry • No substitutes for the medicines • Government policies supportive • Biotechnology is a threat to synthetic pharma products • Entry price regulation exists • Economies of scale exist • Proprietary technology • Product existence POWER OF SUPPLIERS POWER OF BUYERS • Volume benefits occur • End consumers do not have bargaining power • Inputs standard, available locally • Brand identity exists but is in the hands of Influencer (Doctors) • Numerous suppliers-switching cost low • Price Sensitivity is less • Suppliers can go for forward integration • Highly fragmented market, so buyer concentration v/s industry is low • Raw material cost constitute more than 50% of the total expenses RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Industry Competition • Highly competitive. • Top five players have mere 18% market share • 18% market share • Lower fixed cost and high working capital 11
  12. 12. Indian Automobile Industry 12
  13. 13. THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTES • Substantial entry • Fairly mild • New company requires high capital. • Other forms of transportation available • Achieving minimum efficient scale is prohibitive • Enter through strategic partnership, buying, merging • Domestic market works well locally than globally POWER OF SUPPLIERS POWER OF BUYERS • the power axis is tipped in industry • The power axis is tipped in the consumers’ favor • Powerful buyers dictate their terms to supplier • Low switching costs from among competing brands. RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Intense due to the entry of foreign companies • Rivalry - high with any product being matched in a few months by the competitors • Technical capabilities • Collaboration with international players 13
  14. 14. THANK YOU 14

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