COMPETITIVE FORCES THAT

SHAPE STRATEGY
By:
Abhay Tiwari
LHSB
POTER’S FIVE FORCES MODEL
THREAT OF NEW ENTRANTS
• Desire To Gain Market Share.
• The Concept Of Entry Barriers.
• Supply Side Economies Of Scale.
• Demand Side Benefits Of Scale.
• Customer Switching Cost.
• Capital Requirements.
• Incumbency Advantages.
• Restrictive Government Policy.
BARGAINING POWER OF SUPPLIERS
• Concentrated Industry As Compared To The One
It Supplies To.
• Supplier Industry Can Supply To Other
Industries Also.
• Buyers Of These Suppliers Have High Switching
Costs.
• Supplier Products Are Differentiated.
• No Substitute Available.
• Forward Integration.
BARGAINING POWER OF BUYERS
• Few buyers and more suppliers.
• Undifferentiated products.
• No or Very low switching cost.
• Backward integration.
• Availability of the substitute products.
• Quality is an unimportant factor for the buyer.
THREAT OF SUBSTITUTES
• Substitute offers attractive price-performance
trade-off.
• Buyer’s switching cost is low.

• Industry experts have to be attentive to the

industry changes which may bring new
substitutes to the market.
EXISTING COMPETITION
• Large number of competitors.
• Competitors are of equal size.
• Industry growth is slow.
• All businesses have similar goals and
aspirations.
• There is a price competition among the players.
THANK YOU