1. Rivalry within the Industry: The rivalry within an industry depends on 1. Number of competitors 2. Rate of industry growth 3.

Intermittent industry overcapacity 4. Exit barriers 5. Diversity of competitors 6. Informational complexity and asymmetry 7. Fixed cost allocation per value added 8. Level of advertising expense 9. Economies of scale 10. Sustainable competitive advantage through improvisation 2. Threat of Substitute Products: The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). 1. 2. 3. 4. Buyer propensity to substitute Relative price performance of substitutes Buyer switching costs Perceived level of product differentiation

The competition engendered by a Threat of Substitute comes from products outside the industry. 3. Barriers to New Entrants: Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition). 1. 2. 3. 4. 5. 6. 7. 8. 9. The existence of barriers to entry (patents, rights, etc.) Economies of product differences Brand equity · Switching costs or sunk costs Capital requirements Access to distribution Absolute cost advantages Learning curve advantages Expected retaliation by incumbents Government policies

Easy to Enter if there is:

Significant buyer switching costs . Common technology Little brand franchise Access to distribution channels Low scale threshold Difficult to Enter if there is: 1. Buyers purchase a significant proportion of output . Buyer information availability 7.1. 2. Producers threaten forward integration . 3. Buyer price sensitivity · Differential advantage (uniqueness) of industry products 10.can threaten to buy producing firm or rival Buyers are weak if: 1. Ability to backward integrate 8. Buyers possess a credible backward integration threat .there are a few buyers with significant market share 2.products not standardized and buyer cannot easily switch to another product 3. Degree of dependency upon existing channels of distribution 3. different) . Buyer volume 5.distribution of purchases or if the product is standardized 3. particularly in industries with high fixed costs 4. Buyers are fragmented (many. RFM Analysis Buyers are strong if: 1. Producers supply critical portions of buyers' input . Bargaining Power of Suppliers: . Bargaining leverage.distribution of purchases 5. 4. 4. Buyer switching costs relative to firm switching costs 6. Buyer concentration to firm concentration ratio 2. Bargaining Power of Customers: This depends on: 1. Patented or proprietary know-how Difficulty in brand switching Restricted distribution channels High scale threshold 4. 2. 3. Availability of existing substitute products 9.no buyer has any particular influence on product or price 4.producer can take over own distribution/retailing 2. Buyers are concentrated .

Credible forward integration threat by suppliers 2. 2.product is standardized Purchase commodity products Credible backward integration threat by purchasers Concentrated purchasers . 5.g. Cost of inputs relative to selling price of the product. 4.This depends on: 1. 2. Many competitive suppliers . Suppliers concentrated 3. 3. 3. labor unions) Threat of forward integration by suppliers relative to the threat of backward integration by firms 7. Suppliers are strong if: 1. 4. Significant cost to switch suppliers Suppliers are weak if: 1. Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Presence of substitute inputs Supplier concentration to firm concentration ratio Employee solidarity (e. 6.