Porter`s 5 Forces Model of Competition
*That`s an easy to follow guide how to make analysis using the Porter`s 5 Forces Model of Competition. More about the model here. (I could not describe it better) For those of you who already know it by heart, sorry of taking your time. For those of you who haven`t been using it so far, if you are studying something related to economy, one day you gonna need it for sure.
1. Rivalry among competing sellers
a) market size and market potential
b) present and expected market growth rate
c) degree of concentration
–> number of participants
–> market share of participants
–> market shares of leaders
–> joint market share of 3 to 5 leading companies
d) strategic Groups Map
e) methods of competitive rivalry
Force assessment:
2. Competitive force of new entrants
a) barriers to entry
b) present and future industry`s profitability
c) stage in life of the sector
d) possible entry candidates
Force assessment:
3. Competitive force of substitutes
a) present substitutes
b) percentage of the customer demand being satisfied by the present substitutes
c) future substitutes and their potential danger for the sector
d) possibility of starting substitutes` production by the companies from the examined sector
Force assessment:
4. Competitive force of suppliers
a) supplied items` significance to the production process
b) uniqueness of supplied items
c) cost and problems connected with a change of supplier
d) portion f production costs made up by supplied items
e) the possibility of starting production of the final product by the suppliers
f) suppliers` sector degree of concentration
g) competition in the suppliers` sector
Force assessment:
5. Competitive force of buyers
a) bought items` significance to the production process
b) uniqueness of bought items
c) cost and problems connected with a change of the supplier of the bought item
d) portion of production costs made up by bought items
e) the possibility of backward integration
f) buyers` sector degree of concentration
g) competition in the buyers` sector
Force assessment:
Overall 5-forces assessment:
