five forces industry analysis n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Five Forces Industry Analysis PowerPoint Presentation
Download Presentation
Five Forces Industry Analysis

Loading in 2 Seconds...

play fullscreen
1 / 22

Five Forces Industry Analysis - PowerPoint PPT Presentation


  • 171 Views
  • Uploaded on

Five Forces Industry Analysis. Nicole Fiamingo. Five Forces Industry Analysis Description & Purpose. Developed by Michael Porter Provides an understanding of an industry and its participants Used as a means to decrease the gap between a firm’s external environment and its internal resources.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Five Forces Industry Analysis' - veta


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
five forces industry analysis description purpose
Five Forces Industry Analysis Description & Purpose
  • Developed by Michael Porter
  • Provides an understanding of an industry and its participants
  • Used as a means to decrease the gap between a firm’s external environment and its internal resources
five forces industry analysis objective of the five forces
Five Forces Industry Analysis Objective of the Five Forces
  • Identify the profit potential of an industry
  • Identify the forces that would harm your company’s profitability in that industry
  • Protect and extend your competitive advantage
  • Anticipate changes in industry structure
five forces industry analysis porter s five forces
Five Forces Industry Analysis Porter’s Five Forces
  • Threat of new entrants
  • Bargaining power of suppliers
  • Bargaining power of buyers
  • Threat of substitute products or services
  • Degree of rivalry among existing competitors
five forces industry analysis 1 threat of new entrants
Five Forces Industry Analysis 1. Threat of New Entrants
  • Entry-deterring price
  • Incumbent retaliation
  • High entry costs
  • Experience effects
  • Other cost advantages
  • Product differentiation
  • Distribution access
  • Government restrictions
  • Switching costs

New entrants usually face several barriers to entry, including:

five forces industry analysis 2 bargaining power of suppliers
Five Forces Industry Analysis 2. Bargaining Power of Suppliers

Suppliers bargaining power may be influenced by:

  • Concentration
  • Diversification
  • Switching costs
  • Organization
  • Government
five forces industry analysis 3 bargaining power of buyers
Five Forces Industry Analysis 3. Bargaining Power of Buyers

Buyer’s Bargaining power my be influenced by:

  • Differentiation
  • Concentration
  • Profitability
  • Quality
five forces industry analysis 4 threat of substitute products or services
Five Forces Industry Analysis 4. Threat of Substitute Products or Services

Market displacement by existing/potential substitutes can be influenced by:

  • Relative price/performance trade off
  • Switching costs
  • Profitability
five forces industry analysis 5 the degree of rivalry among existing players
Five Forces Industry Analysis 5. The Degree of Rivalry Among Existing Players

The intensity of competition within an industry is determined by:

  • Market Growth
  • Cost Structure
  • Barriers to exit
  • Product switching
  • Diversity
five forces industry analysis strengths
Five Forces Industry Analysis Strengths
  • Forecast future changes in each of the five forces
  • Discover how these changes will affect the other forces
  • Discover how the interrelated changes will affect the future profitability of the industry
  • Discover how you might change the strategy to exploit the changing industry structure
five forces industry analysis weaknesses
Five Forces Industry Analysis Weaknesses
  • Underestimates the capabilities that may serve as the company’s competitive advantage in the long-term
  • Does not take into account the synergies and interdependence within a corporation’s overall portfolio
  • Strict interpretations ignore social & political factors
  • Does not address why or how companies are able to get advantageous positions
five forces industry analysis how to do it
Five Forces Industry Analysis How to Do It

Step 1: Collect Information

  • Identify your industry
  • Look at existing demand & supply patterns
  • Identify the characteristics of each of the five forces
  • Examine & assess their impact on the industry
five forces industry analysis how to do it1
Five Forces Industry Analysis How to Do It

Main Sources of Competitive Pressures

  • Rivalry among competitors
  • Threat of substitute products
  • Threat of potential entry
  • Bargaining power of suppliers
  • Bargaining power of buyers
five forces industry analysis how to do it2
Five Forces Industry Analysis How to Do It

Step 2: Assess & Evaluate

  • Determine the direction of the force
  • Give each force a value indicating if it is strong, moderate, or weak.
    • Scale of 1 – 5, with 1 being the weakest
  • The ultimate goal: To identify the ability of your company to successfully compete within its industry, given the collective strength of the five forces
five forces industry analysis how to do it3
Five Forces Industry Analysis How to Do It

Step 3: Develop Strategy

  • Repeat the first two steps in light of industry change and evolution
  • Long-term industry trends should be analyzed to determine whether the profitability of the industry is sustainable and how this will affect your company’s competitive position.
five forces industry analysis conclusion
Five Forces Industry Analysis Conclusion
  • Understanding how an industry will evolve provides important direction for selecting and managing strategy around these five criteria
  • Not all industries are alike-for companies with product portfolios across numerous industries, this technique should be repeated for each industry