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Porter 5 forces analysis | ||
Michael Porter's 1979 framework uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. Four forces -- bargaining power of customers, the bargaining power of suppliers, the threat of new entrants, and the threat of substitute products -- combine with other variables to influence a fifth force, the level of competition in an industry. Each of these forces has several determinants: The bargaining power of customers o buyer concentration to firm concentration ratio o bargaining leverage o buyer volume o buyer switching costs relative to firm switching costs o buyer information availability o ability to backward integrate o availability of existing substitute products o buyer price sensitivity o price of total purchase The bargaining power of suppliers o supplier switching costs relative to firm switching costs o degree of differentiation of inputs o presence of substitute inputs o supplier concentration to firm concentration ratio o threat of forward integration by suppliers relative to the threat of backward integration by firms o cost of inputs relative to selling price of the product o importance of volume to supplier The threat of new entrants o the existence of barriers to entry o economies of product differences o brand equity o switching costs o capital requirements o access to distribution o absolute cost advantages o learning curve advantages o expected retaliation o government policies The threat of substitute products o buyer propensity to substitute o relative price performance of substitutes o buyer switching costs o perceived level of product differentiation The intensity of competitive rivalry o power of buyers o power of suppliers o threat of new entrants o threat of substitute products o number of competitors o rate of industry growth o intermittent industry overcapacity o exit barriers o diversity of competitors o informational complexity and asymmetry o brand equity o fixed cost allocation per value added o level of advertising expense Some argue that a 6th force should be added to Porter's list to include a variety of stakeholder groups from the task environment. This force is referred to as "Relative Power of Other Stakeholders". Some examples of these stakeholders are governments, local communities, creditors, and shareholders such as employees, & so on. This 5 forces analysis is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies. Copyright 2008 - France BtoB from Wikipédia
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• Vertical integration : Problems and Bene&hellip • Defensive marketing warfare strategies • The Global Economy • Flanking marketing warfare strategies • Cluster effect • Methodologies of strategic planning | |
