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Five Force's

In: Business and Management

Submitted By mcavallaro
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Five Force Model and Corporate Culture The five force model is a tool to analyze the industry and competition in an industry. Industry profit potential is determined by how intense the competitive rivalry there is in a specific industry. The developer of the five force model, Michael Porter, felt this was a better indicator for a company then the SWOT analysis.
The Force’s The first force that Porter came up with was the threat of new entries. If it is easy to enter the market the more competition there is. Also the more competition in the market, the harder it is to gain a market share in the industry. If there are many new entrants into an industry, this will result in a decrease of profitability for all the firms in the industry. An example of this is in the Smartphone industry, there are only two real big players in the industry, Apple and Samsung, they own the majority of the sales in the industry. There are other developers that have some competition such as Motorola, HTC and BlackBerry, but Apple and Samsung own the majority of the market share. The next force is the bargaining power of customers. This is that the customers (buyers) can influence competition by putting pressure on price and quality. An example of this was when Bank of America implemented a monthly fee for customers to use their debit cards, many customers then closed down their accounts and joined a bank that didn’t have this charge. Because of many people starting to leave Bank of America, they had to remove the fee to hope to keep from more customers leaving the bank. The bargaining power of suppliers is similar to the last force but it is how the suppliers influence the price and quality that they give to the producer and ultimately influence the selling price of the product. An example of this is when the supplier of parts that were needed to build Boeing airplanes,

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