Porters five forces model

Presented by : Veejay

Porters five forces model

American academic born in 1947Professor at Harvard Business SchoolTheories on EconomicsBusiness StrategySocial CauseMost cited author in Business , EconomicsFounder-The Monitor Group (Deloitte)

Who is Michael E Porter ?

Com

petition

New Entrants

Supplier powerBuyer Power

Substitute

Business Strategy

5 Forces

Players in the marketProducts in the marketScale of competitorsCR ratio and Herfindahl ratioCost structureBusiness diversity of competitorsStructure of competitors

Competition in the Industry

Ease of access for entrantsCapital intensiveBarriers to entryEase of exitAccess to distribution channelsGovernment policy for new entrantsEconomies of scale

New Entrants

Suppliers concentrationDifferentiation of inputsAvailability of inputsConstraint to suppliersScarcity of inputsPotential of vertical integrationInputs contribution to the product

Supplier power

Buyers concentrationAlternative to customersPrice sensitivityDegree of product differencesBuyers expectationsRegulations constraintsCustomers switching cost

Buyer power

Availability of substituteAvailability of complementElasticity of productVeblen or Giffen(Inferior)Switching cost for customersCustomers expectationsProduct concerns

Substitute

Effect of InternetCyber warfareForces have become abstractResilient“Essence of strategy is choosing what not to do”. by- Michael E Porter

Summary