The Porter Framework

2. The Porter Framework McIntire Investment Institute Presented by Michael Rosete

3. What is the Porter Framework? • Technique developed by Michael Porter • Used to assess the competitive position of a company • Reveals how customers, suppliers, potential entrants, and substitute products are less obvious competitors

4. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

5. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

6. Also known as Barriers to Entry Economies of scale Product differentiation Capital intensity Government policy Threat of New Entrants May I Play?

7. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

8. Determine pricing and quality Switching costs Number of available suppliers Forward integration Supplier Power Bargaining Power

9. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

10. Buyer concentration Product differentiation Switching costs Value added Backward integration Buyer Power The Other Side

11. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

12. Price/Performance tradeoff Current and future Switching costs Substitute improvement Threat of Substitutes Alternatives

13. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

14. Number of competitors Industry growth Product differentiation Competitor diversity Exit barriers Industry Competition Rivalry

15. Threat of New Entrants Supplier Power Industry Competition Buyer Power Threat of Substitutes

16. Recap • Systematic industry and competitive analysis • Customers and suppliers are friends and foes • Always worry about new entrants and substitutes • NEVER think that competitors do not exist

17. Any Questions? Thank you.