Week 2 Slides-Porter's Five Forces

Week 2 Slides-Porter's Five Forces - January 29, 2010...

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January 29, 2010
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Porter’s Five Forces Industry Attractiveness Rivalry Threat of Substitutes Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers
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Porter’s Five Forces Industry Attractiveness Rivalry Threat of Substitutes Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Determines the total profitability in the value chain
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Porter’s Five Forces Industry Attractiveness Rivalry Threat of Substitutes Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Determines how the profit is allocated among companies in the value chain.
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Rivalry Refers to price competition; profits decrease as rivalry increases Industry leader : decreases rivalry Number of competitors : more competitors increase the rivalry Fixed costs : higher fixed costs increase rivalry Exit barriers : higher barriers increase rivalry
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Problem 2 (page 143)  Very few companies compete in a certain industry. Using Porter’s model an analyst is likely to conclude a) rivalry is high b) rivalry is low c) the threat of substitutes is high d) the threat of substitutes is low e) none of the above
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Week 2 Slides-Porter's Five Forces - January 29, 2010...

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