How does the Porter’s 5 force model help a strategist to achieve his goal?

Porter’s 5 Forces model – Strategist’s Goal is to position the firm in such a way that it is not vulnerable to attack from any of these 5 forces. Hence the company must find a best position in the industry where it can defend itself against competitive forces.

Force I - Threat of New Entrants New entrants bring new capacity and share the same markets affecting ROI of the existing players. Strategies for you Creates high entry barriers Ways: Economies of Scale, Product Differentiation, High Capital Requirement, Switching Costs, No access to your Distribution Channels, Government Policies

Force II - Rivalry Among Existing Competitors

Threat of Substitute Products  When the products have similar type of match as per their needs. they can switch orders between suppliers (playing off against each others) Strategies for you  To create new buyers  High cost of switch-over ( Cell Phone) Force IV . the suppliers may form Cartel System / Industry Association. . Created by price competition. the other retaliates with counter-move making all firms to suffer. but buying in large quantum. Force V . Force III . Advertising battles. Continuous product innovations.Bargaining Power of Suppliers  When the products have few substitutes. Increased customer service. Warranty.Bargaining Power of Buyers  If the buyers are small in nos.  If anyone implements a strategy.

Choose strategy to the next competitive balance before rivals recognize it. the customers may switch over to Tea & Soft Drink. Exploiting Change – Anticipate shift in the factors underlying the forces.e. If Coffee prices are hiked. How to create defendable positions against 5 competitive forces. then better avoid that market. Respond to them. B) C) .g. Influencing the balance – Innovation in marketing can raise brand identification or differentiation of products. possible approachesA) Positioning the Firm – If the competitive forces are too strong in particular area.

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