Porter’s Five Forces

Analyses
 RIVALRY
(High rivalry  Low attractiveness)
Firms are lowering prices to get market share > to attract customers, then it is Rivalry..
You may be competitive, bring new features BUT that doesn’t mean ur margin gets affected, so competing only
interms of price is called Rivalry..
Factors Data/Remarks Low/ Rivalry Industry
Moderate/ Attractiveness
High
Rating: 1 --- 5 Rating: 1---5

Number of competitors (PROP TO RIVALRY)

Industry Growth (INV TO RIVALRY)

Fixed Cost (PROP TO RIVALRY)

Product Differentiation (INV TO RIVALRY)

Switching Costs (INV TO RIVALRY)

Excess Capacity=unused capacity (PROP TO

RIVLRY)
Perishability(Whats shelf life, eg samosa
perishblty is 1day) (PROP TO RIVALRY)
High exit barriers (asset specialization, cost of
exit, gov. restrictions) (PROP TO RIVALRY)
Strategic stakes (having high othr businesses or
incomes) (PROP TO RIVALRY)
Average Attractiveness
 THREAT OF NEW ENTRANTS
(High threat  Low attractiveness)

Factors Data/Remarks Low/ Threat of Entry Industry

Moderate/ Rating: 1 ---- 5 Attractiveness
High Rating: 1----5
Rating: 1 --- 5 Rating: 1---5

Economies of scale (INV TO THREAT)

Demand side benefits of scale (INV TO THREAT)

Capital requirements (INV TO THREAT)

Product differentiation (INV TO THREAT)

Brand differentiation/identity (INV TO THREAT)

Access to distribution channels (PROP TO THREAT)

Access to raw materials (PROP TO THREAT)
Switching costs of customers (PROP TO THREAT)
Barriers to exit (INV TO THREAT)
Average Attractiveness
 SUPPLIERS’ BARGANING POWER
(High bargaining power  Low attractiveness)
Factors Data/Remarks Low/ Suppliers’ Industry
Moderate/ Bargaining Attractiveness
High
Rating: 1 --- 5 Rating: 1---5

Suppliers’ concentration (PROP TO SB

PWR)
Industry switching costs (PROP TO
SBPWR)
Product (supplies) differentiation (PROP
TO SB PWR)
Substitutes for supplies (INV TO SB PWR)

Threat of forward integration (PROP TO

S.B.PWR)
Dependence on industry (INV TO SB PWR)
Average Attractiveness
 BUYERS’ BARGANING POWER
(High bargaining power  Low attractiveness)
Factors Data/Remarks Low/ Buyers’ Industry
Moderate/ Bargaining Attractiveness
High
Rating: 1 --- 5 Rating: 1---5

Customer Concentration (PROP TO BB PWR)

Low customer switching costs (INV TO BB PWR)

Product differentiation (INV TO BB PWR)

Brand differentiation (INV TO BB PWR)

Threat of backward integration (PROP TO BB PWR)

Customers price sensitivity

a. concentration of purchases (PROP TO BB PWR)
b. customers’ financials (INV TO BB PWR)
c. Impact on product quality
Average Attractiveness
 THREAT OF SUBSTITUTES
(High threat  Low attractiveness)
Factors Data/Remarks Low/ Threat of Industry
Moderate/ Substitutes Attractiveness
High
Rating: 1 --- 5 Rating: 1---5

Availability of close substitutes (PROP

TO TOS)
Switching costs (INV TO TOS)

Substitute’s price-value ratio (PROP TO

TOS)
Profitability of the producers of
substitutes (PROP TO TOS)
Average Attractiveness
Forces Average Weights Net Score
Attractiveness

Rivalry
Threat of new entrants
Suppliers’ Bargaining Power

Buyers’ Bargaining Power

Threat of substitutes
OVERALL ATTRACTIVENESS