arvind jakharppt
TRANSCRIPT
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Prepared by:- Arvind Mehta(02)
Vivek Gupta(25)
Rohit Kumar(31)
Akhil Shah(36)
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An industrys profit potential is largely
determined by the intensity of competitive
rivalrywithin that industry
MICHAEL PORTER
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The model of the Five Competitive Forces wasdeveloped by Michael E. Porter
An important tool for analyzing an organizations
industry structure in strategic processes.
These forces determine the intensity of competitionand hence the profitability and attractiveness of an
industry impact on a companys ability to compete in a
given market.
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Porters 5 Forces Model
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The term 'suppliers' comprises all sources forinputs that are needed in order to providegoods or services
Supplier bargaining power is likely to be
high when:-
The market is dominated by a few largesuppliers rather than a fragmented source ofsupply
There are no substitutes for the particularinput
Employee solidarity
bargainingpower ofSupplier
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Determines how much customers can
impose pressure on margins andvolumes.
Monospony
Customers bargaining power is likelyto be high when
Buyers are concentrated Buyers purchase significant
proportion of production
The customer knows about theproduction costs of the product
Low when
Producer threaten forward integration
Producer supply critical of buyersinput
bargainingpower of buyers
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The threat of new entries willdepend on the extent to whichthere are barriers to entry .These are,
High initial investments and fixedcosts
Brand loyalty of customers
Scarcity of important resources,e.g. qualified expert staff
Existing players have closecustomer relations
Threat ofNew Entrants
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A threat from substitutes exists ifthere are alternativeproducts with lower prices ofbetter performanceparameters for the same purpose
The threat of substitutes isdetermined by following factors
Brand loyalty of customers
Close customer relationships
Current trends.
Threat ofSubstitutes
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This force describes the intensity ofcompetition between existing players(companies) in an industry
Competition between existing playersis likely to be high when
There are many players of about thesame size
Players have similar strategies
There is not much differentiationbetween players and their products
Competitive Rivalrybetween ExistingPlayers
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Thus, Porters Model of Five CompetitiveForces is a simple but powerful tool forunderstanding where power lies in a businesssituation.
It helps to understand both the strength ofyour current competitive position & the
strength of a position you are looking tomove into.
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THANK YOU