Premium Essay

Porters 5 Force Analysis

In: Business and Management

Submitted By dhaval1234567
Words 594
Pages 3
Porter’s 5 Forces Analysis
= Suppliers, Customers, New Entrants, Substitute Products, Competitors
What is Porter’s 5 Forces Analysis?
Porter’s 5 forces analysis represents the competitive environment of the firm. It is a strategic foresight to avoid putting the competitive edge at risk and ensure the profitability of products on a long term. For the company this vision is quite important because the firm is able to direct its innovations in terms of choice of strategies and investments. The profitability of businesses within the industrial structure depends on the following forces: Competitive rivalry within the industry; Threats of new entrants; Threats of substitutes products; Bargaining power of customers; Bargaining power of suppliers.

Golden Rules
6th force = Often the model is adjusted with a 6th force, the public authorities. This is important because the law and the norms can influence each of Porter’s 5 forces. Key factors for success = The key success factors of the environment have to be identified. To have a competitive advantage some strategic elements should be controlled.
Threats of new entrants

Public Authorities

Bargaining power of suppliers

Competitive rivalry within the industry

Bargaining power of customers

Threats of substitute products

© Copyright 2008 LUXINNOVATION G.I.E., The National Agency for Innovation and Research in Luxembourg

1/2

Porter’s 5 Forces Analysis
= Suppliers, Customers, New Entrants, Substitute Products, Competitors
Structure of Porter’s 5 Forces Analysis
The competitive rivalry within the industry The competition between firms determines the attractiveness of a sector. Companies are struggling to maintain their power. The competition changes based on sector development, diversity and the existence of barriers to enter. In addition it is an analysis of the number of competitors, products,…...

Similar Documents

Premium Essay

Porters 5 Forces

...professional services and application management services, with IMB solutions, which leverage industry and business-process expertise while integrating the industry-leading portfolio of IBM and strategic partners, to define the upper end of client-valued services. 3. Software * Consists primarily of middleware and operating systems software 4. Systems and Technology * Provides clients with business solutions requiring advanced computing power and storage capabilities. 5. Global Financing * facilitates clients’ acquisition of IBM systems, software and services Main IBM Competitors: Hewlett-Packard HP operations are organized into seven business segments: 1. Personal Systems Group (‘‘PSG’’) Is a hydride across all IBM SBU 2. Services The Strategic group competing with IBM Global Business Services SBU 3. Imaging and Printing Group (‘‘IPG’’) 4. Enterprise Servers, Storage and Networking (‘‘ESSN’’) The Strategic group competing with IBM System and Technology SBU 5. HP Software The Strategic group competing with IBM Software SBU 6. HP Financial Services (‘‘HPFS’’) The Strategic group competing with IBM Global Financing SBU 7. Corporate Investments Oracle Corporation Oracle is organized into three businesses units: 1. Software The Strategic group competing with IBM Software SBU * Operating System: * new software licenses * software license updates * product support 2. Hardware systems The......

Words: 1277 - Pages: 6

Free Essay

Porter 5 Forces and Pestel Analysis of Nestle Milo

...1) Aims: To carry out critical analysis, evaluation and discussion on the strategies for an organisation to remain its competitiveness in its industry. 2) Students will work in group of 4 or 5 students a group. Therefore, this is a group effort. Teamwork and coordination are highly expected. Reference books for sources of information are necessary. 3) Select a public listed company or organisation from Bursa Malaysia. Identify one (1) or two (2) products (maximum) to be discussed in this assignment. 4) Prior to detailed write-up, students are required to submit proposal on their choices of the company and product(s) concerned to seek approval from the tutor concerned. This is to identify its suitability and to avoid duplicating. a) The proposal shall have brief description on the following to be assessed: i) The industry and its product(s) to be studied, ii) Its supply chain, competitors, etc., iii) List of potential strategies involved, etc. b) Hence, as a proposal, it shall NOT have more than two (2) pages. The format should be in Times New Roman font and of size 12, line spacing of 1.5 with the normal page margin on A4 paper. c) Proposal shall be submitted, latest on Week 4, for approval. Students are advised to submit earlier to avoid rejection due to some reasons. For instance, selection is on first come first approve basis. i) If the proposal is not approved as mentioned above, the group concerned is required to submit a fresh proposal. Decision and......

Words: 749 - Pages: 3

Free Essay

A Water Concessioners Porters 5 Forces Analysis

...A WATER UTILITY CONCESSIONER PORTERS FIVE FORCES ANALYSIS 1. Rivalry among existing competitors- Low to Non-Existent. Since it is under concession agreement, there is no other water utility company that can engage any business similar to A Water Utility concessioner, unless granted by the government under special agreement and with full knowledge and approval of A Water Utility concessioner. 2. Threat of new entrants- Low to Non-Existent. Companies that may want to apply for the concession must first comply with government requirements and also must have a substantial amount of capital investment (around 6 Billion Dollars starting capital), not to mention the technical expertise to run and maintain a water utility company. 3. Bargaining Power of Supplier- Medium. Although the primary raw material of A Water Utility concessioner is water which is basically free, the materials used for distribution line maintenance and expansion are quite few. Though this is the case, A Water Utility concessioner still has a slight control on the pricing of these materials unless the raw materials for these items like resin, steel, alum coagulating chemical used in treating raw water), etc. increases. 4. Bargaining Power of Customer- Medium. This is due to the regulated tariff by the government under the MWSS Regulatory office which deals directly with A Water Utility concessioner.\ 5. Threat of Substitute- Low. The small water refilling stations also get......

Words: 353 - Pages: 2

Free Essay

Powerpoint Presentation on Biolite; Porters 5 Forces Analysis

...line with local needs 1st World Outdoor Recreational Equipment Market People may buy-in to the story / social benefit as well as the product. BUT – business driven by personal mission, passion, interest in innovation, & a ‘virtuous cycle’ of social & economic benefits NEW FACTOR: Emergence of Force of BELIEF – potentially interesting dynamic to see how this develops in future New Entry Threats WTP-C=SSP Buyers Bargaining Power Suppliers Bargaining Power Industry Rivalry *Relatively new and growing market Suppliers options high, but some possibility of support from powerful organisations? Business collaborations partly out of a shared value system? (Influence of Belief dynamic?) Substitutes Threat Innovative synergy of electricity generation & cooking functionality; limited patent protection. Competitive advantage / differentiation factor; thermal energy converter to electricity Patents, innovation, DUAL MARKET with strong & wellplanned rollout strategy in both. Estimate pricing range USD $20 - $100; other options? OPTIONAL DISCUSSION ISSUES: Does 5-Forces model apply equally to social enterprise? Modifications to the model necessary? How to apply analysis to success of social business? Implications for the future? Any ethical considerations? ...

Words: 477 - Pages: 2

Premium Essay

Porter 5 Forces Analysis of Computer Industry

... The FICCI-KPMG Indian Media and Entertainment Industry Report 2013 published a record 16% growth over the previous The report also states that the games industry in India will grow at a 22% CAGR to cross Rs. 4000 crore ($776m) by 2017. That means the video games industry in India will almost triple itself in 5 years.year, to Rs.1500 crore (Rs. 15 billion / $277 million). Sweet numbers. The console segment will overall grow at a rate of 19% CAGR, to reach Rs. 1900 crore ($351m) by 2017. The report is yet to take in other future factors such as the possible success/failure of PS4 and the upcoming Xbox. On the other hand, the Internet & Mobile Association of India estimates that 50% of India’s mobile users have access to gaming content on their devices. These numbers are expected to rise amid increased penetration of smartphones and tablets. Mobile gaming revenues in India typically have come through telecom operator partnerships, but this is expected to change by 2014, the report states, when sources such as app-stores and online marketplaces will dominate mobile revenues. This despite the fact that operators are now offering up to 70% revenue share to game publishers. As expected, the big challenge for game publishers is monetisation, as a chunk of mobile game revenue in India comes from ad-funded free-to-play games. This also might be due to the fact of limited high-speed connectivity of smartphones and tablets alike, and limited access to credit cards. On a......

Words: 654 - Pages: 3

Premium Essay

Apple Porters 5 Forces

...Coursework 1 Hand in Date and Time: 13/11/13 at 3pm on StudyNet and in Coursework Hand-In point Weighting: 30% Title: Marketing Audit Format: Report Type: Group (approx 4-5 members) Select one of the following organisations and familiarise yourself with the relevant organisation website * Apple Inc www.apple.com CONSUMER ELECTRONICS * Tiffany’s & Co www.tiffanys.co.uk LUXURY RETAIL 1. Write a brief overview of the organization Access the relevant industry Mintel /Keynote report and other relevant research from information databases 2. Identify and illustrate the SBU’s (Strategic Business Units) for the organization External Environment 3. Apply PESTEL to the chosen industry. Illustrate and provide detailed explanations 4. Apply Porters 5 Forces to the relevant industry /organization /sector. Illustrate and provide detailed explanations 5. Illustrate in a grid format: Opportunities and Threats Internal Environment 6. Apply McKinsey’s 7S matrix to the organization /sector 7. Apply Marketing mix to the organisation /sector 8. Illustrate in a grid format: Strengths and Weaknesses SWOT Analysis 9. Illustrate in a grid format: corporate SWOT Analysis 10. Illustrate in a grid format: SBU SWOT Analysis (For Apple choose ipad and for Tiffany’s choose Jewellery Strategic Positioning 11. Identify competitors for Apple or Tiffany’s and using a perceptual map with appropriate axes demonstrate a gap in the......

Words: 1792 - Pages: 8

Premium Essay

Porters 5 Force Analysis of Apple Inc

...objective of the Porter’s 5 forces model is to identify and elucidate the current levels of competition existing with a market, by examining what the 5 forces involve. ‘The model therefore provides a detailed and nuanced picture of the industry and to make an in-depth analysis with an idea of what factors one can try to influence in order to create optimal conditions for one’s business and the industry” (P.K. Faarup, P113, 2010). Threat of new entrants High levels of competition currently being practiced in the PC and mobile industry make it difficult for potential competitors to enter the market. Unlike many companies Apple inc. has secured brand loyalty from customers by focusing on product innovation and, research and development. Another way apple has secured its brand loyalty is by creating an emotional connection with consumers by embracing the internet and social media to voice what the company believes in as opposed to what the company does. Apple Inc.’s mission statement supports this theory; “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals, and consumers around the world through innovative hardware, software and internet offerings”. (Apple Inc. Mission Statement) Competitive rivalry with in an industry Threat of new entrants, Bargaining power of suppliers, bargaining power of customers and substitute products and services are all apart of porters five forces and directly......

Words: 1770 - Pages: 8

Premium Essay

Porter 5 Forces

...1. Introduction When examine the marketing environment should analysis the macroenviorment, microenvironment, internal and external audits. Marketing environment not only influence by macroenviorment also of the company its own marketplace and its clients (Vignali et al., 2008, p. 361). Penrose (1959) and Hatch (1997) also suggested that competitive strategy requires both the exploitation of existing internal and external firm-specific capabilities in order to develop new ones. To analysis the microenvironment of a company, the competitive environment must be given the great importance, by trying to construct the competitive strategy, an assessment of the external environment will help to answer one basic question that is what will happen in the markets in which company choose to compete(Asch & Bowman, 1996)? By answering this, the company can therefore to find a well position for its company and make their own strategies but in the meantime, the other issues will be raised, that is what markets are the company are competing in? In order to define the market the firm is, company need to know well about what customers needs, and who it is the customers see the firm will competing with. Porter (1980) said that “the first step in structural analysis is an assessment of the competitive environment – the basic competitive forces and the strength of each in shaping industry structure. The second is an assessment of the company's own strategy-of how well it has positioned...

Words: 2007 - Pages: 9

Premium Essay

Porter 5 Forces

...product is simple The product is not extremely important to buyers; they can do without the product for a period of time Customers are price sensitive Case study: The balance of power is shifting toward buyers. Oil is a commodity and one company's oil or oil drilling services are not that much different from another's. This leads buyers to seek lower prices and better contract terms. 4.Availability of Substitutes. What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses a serious threat. Here are a few factors that can affect the threat of substitutes: Find out more from UK Essays here: http://www.ukessays.com/essays/management/analysis-of-michael-porters-five-forces-management-essay.php#ixzz3Gpa2DxDh...

Words: 558 - Pages: 3

Free Essay

Porter 5 Force

...Michael Porter’s 5 market forces framework. McDonalds Corporation continually monitors its performance to make sure it is competitive and profitable while also being aware of its immediate community responsibilities. This can be achieved by using the Porters 5 Forces model so the company is able to determine where its business needs to change or improve in order to stay competitive in the fast food industry. Porters 5 Forces model focuses on 5 key factors affecting the environment in which a business operates. The threat of substitute products A substitute product is one that can be used as an alternative to a company’s own. It could be argued that the threat of substitute to McDonald’s comes from pizzas and other domestic kebab and fast food houses. However, most of the above do not have the same level of convenience that McDonald’s offers, in having a number of outlets in big cities and also through the use of multiple drive-through outlets. The threat of new competitors The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are: * How loyal are the end users in this industry? * How troublesome or hard is it for the end users to switch and use another product? * Does it require a large seed capital to enter this industry? * Do entries to this industry regulated by government? * How hard is it to gain access to the distribution...

Words: 891 - Pages: 4

Premium Essay

5 Forces by Porter

...Porter 5 forces of Universal Music Group Rivalry within Music Industry According to Universal’s last full-year results of recorded music market, for FY 2014, we can conclude that the music industry is concentrated, the market share of which is held by three largest firms. They are Universal Music, Sony Music and Warner Music separately. Hence, there are not many other firms except these three giants that can have a significant market share. Although the competition is remain intensive among these three firms, Universal Music has achieved the highest revenue of the total recorded music market in the world. [pic] Reference: http://www.musicbusinessworldwide.com/whos-more-powerful-universal-music-or-sonyatv/ Bargaining power of Suppliers In Music Industry, the suppliers are artists, who have signed a contract with a music company. In the beginning, these artists are not famous, they just need to cooperate with music companies and rely on the packaging and sensationalization. Hence, they do not have much leverage with UMG. However, once these artists have became celebrities or even giant stars, they will gain more reputation and power to bargain with UMG. After all, in this moment, they can use their own fame to achieve revenues without UMG. Bargaining power of Buyers Power Buyers can be classify into two groups: one is mass consumers, another is retailers. Mass consumers command a high bargaining power. Although there are a minority of famous firms...

Words: 486 - Pages: 2

Premium Essay

Porter 5-Forces Model

... [pic] Keuka College Bachelor of Science in Management List 1. Develop a Porter 5-forces model of the casino industry. Make sure you discuss each of the five forces in a separate paragraph or section 3 2. How are the gambling companies in Las Vegas responding to the changes in the industry structure and the increased competition . 21 3. How have the casinos in Atlantic City tried to compete with Las Vegas? What threats do they face . 23 Chen Huisheng 323945 Lin Weijie 324066 1.Develop a Porter 5-forces model of the casino industry. Make sure you discuss each of the five forces in a separate paragraph or section. For purposes of this case, we will define the casino industry as including full-service, diverse entertainment (i.e. traditional) casinos of Las Vegas and Atlantic City, and treat other gambling alternatives (e.g. Native American casinos, riverboat gambling, etc.) as substitutes. When discussing each of the five forces, be sure to consider each of the factors relevant to each of these five forces as we discussed in class. In terms of Porter’s 5 forces analysis, the bargaining power of suppliers is weak because of the fact that casinos basically provide their own services with internal resources, such as employees properly trained in various casino games. The bargaining power of customers is strong, especially because even a slight change in the demand for casino services could directly impact the revenues of the......

Words: 6744 - Pages: 27

Premium Essay

Porter 5 Forces Tesla

...After several downturns of the gas-fuelled automobiles market some caused by the 2009 financial crisis in US and the instability of the oil price, the automobile industry has been looking forward to develop new energy powered vehicles. This is the case of the British automaker Aston Martin, in recent days, has announced the deal with the Chinese firm LeTV to develop electric cars and bring them to the market by 2018. Through this initiative, both firms are vying against Tesla luxury car segment where is the forerunner of the new-energy vehicles marker. In this essay, the Porter Five Forces framework will be analysed on the electric vehicle market. The emerging market of Electric Vehicles, in the start-up stage of the industry lifecycle, is capturing the attention of automakers prompting a strong rivalry between incumbents namely Nissan, General Motors, and allowing the entrance to new comers such as Tesla that is now heading the market with a clear differentiated position in the industry. The attractiveness of the electric vehicle market has been catching the attention of the already positioned luxury automakers, for example, Daimler's Mercedes-Benz, Volkswagen's, Porsche and Audi, but also new comers such as Tesla, this last one, with a strong automobile positioned as current market leader on electric vehicles. To tackle Tesla’s strategy, Aston Martin recently signed a deal with a Chinese tech company LeCo (formerly LeTV) to develop an all-electric car, model RapidE, to...

Words: 1135 - Pages: 5

Premium Essay

Porters 5 Forces

...Supermarket Industry Porters 5 Force’s Porter (1980) illustrates in this analytical tool 5 variables that determine the attractiveness of an industry for organisations in terms of profitability in their immediate environment. Using the forces in this model we can analyse how attractive the UK Supermarket industry is to enter, the 5 forces are as follows. The threat of potential new entrants Barriers to entry in the UK supermarket industry relies on the entrants capability of matching capital requirements of existing firms, the UK supermarket industry is dominated by firms known as Tesco, Asda, Sainsbury’s and Morrison’s (Big 4) owing up to 69% of market share in the UK. Looking at the experience curve (1960: Boston Consultancy Group) A new entrant would have to achieve the economies of scale needed to achieve cost parity with the big 4 and compete on cost advantage. In the supermarket industry achieving economies of scale is not on production but other factors such as efficiency, pricing, range of goods and value of products. Tesco for example have very low cost margins in comparison to the scale of their operations and distribution channels but they are able to achieve high sales because the convenience, range of products and different services they offer. Product differentiation is another barrier to entry, a new entrant would need to achieve and individual level of differentiation and attain an identity through promotions and costly advertising, total......

Words: 1807 - Pages: 8

Premium Essay

Porters 5 Forces

...Nakia Hart MBA 640 Dr. Turnquist Porters 5 forces Analysis of Casino Industry Internal Rivalry (High significance) In Las Vegas, the casino-resort market has become hyper-competitive, especially since all of the hotel-casinos rely heavily on room revenues and convention guests. Currently, the supply of hotel rooms far outweighs the demand for them, pushing room rates down to unprofitable levels. Entry and Exit (High significance) Entry and exit forces are probably the most restricting aspects of the competitive landscape in the casino-resort industry. The casino-resort industry is highly regulated and highly taxed. Government officials play a crucial role in the success or failure of casino-resorts. It is impossible to enter the industry without a gaming license and, in some cases, a land concession. Buyer Power (Moderate significance) As evidenced by the Las Vegas market, buyers have some power in the casino-resort industry and are capable of exerting downward pressure on room rates. Furthermore, buyer preferences are considered in determining attractions and other amenities, such as entertainment shows and restaurants. Every casino-resort company is constantly trying to out-do its competitors with new developments and offerings. Supplier Power (Low significance) Suppliers in the casino-resort industry have extremely limited power, as they reside in a highly competitive market place in which price is determined by supply and demand. Obtaining......

Words: 369 - Pages: 2