Michael Porter Competitive Strategy

Other areas that affect new entry into a market include capital requirements, economies of scale, and brand identity. All of these factors have been discussed to some degree under other

An industry product can be substituted by a substitute product which has the same or similar function by a different means. A substitute can limit industry profitability and growth. Porter (2008) gives several key elements on determining the threat.

Porter’s five forces model seeks to portray how attractive an industry is in relation to the five competitive forces which includes, threat of substitutes, threat of entry, bargaining power of customers, intensity of competitive rivalry and bargaining power of suppliers.

Suppose losses cause industry X to contract and, as a result, the prices of relevant inputs decline. Industry X is:

2. How Porter's Five Forces of Competition impact the company Porter set out his famous Five Forces model in chapter 1 of his 1980 Competitive Strategy: Techniques for Analyzing Industries and Competitors, which has now become the dominant paradigm for the "Structural Analysis of Industries." The model places supply chain forces on the horizontal access and market structure vertically above and below industry competition, which they all point to as the center of potential profitability (Hitt, Ireland and Hoskisson,

The threat of new entrants is measured by the level of entry barriers, brand reputation and customer loyalty, potential for existing competitors to expand, growth of buyer demand,

Threat of backward integration is low because compared to competition, these goods are baked in a delicate manner using traditional recipes that is confidential to the baker. So the bargaining power is low due to the fact that it’s not something the customer can successfully bake themselves. Marsha’s bakery may produce the same range of baked goods as its competitors. But given the unique manner in which they are produced, they are differentiated from that of its competitors and cannot be easily

Porter’s Five-Forces Model of Industry Competition is the most widely utilized tool to evaluate the competitive environment (Dess, Lumpkin, Eisner, & McNamara, 2014). Dess, Lumpkin, Eisner & McNamara (2014) define Porter’s model

The threat of new entrants refers to the threat posed by new competitors within an industry. If it is easy for new firms to enter the industry barriers to entry are low and the threat of new entrants is high. A profitable industry attracts more competitors. Economies of scale, learning curve effects and other macro factors impact the nature of an industry 's

Buyers have more power when they are large-volume buyers, the product is a significant aspect of the buyer's costs or purchases, the products are standard within an industry, there are few switching costs, the buyers earn low profits, potential for backward integration of the buyer group exists, the product is not essential to the buyer's product, and the buyer has full disclosure about supply, demand, prices, and

♦ Products are readily available from many sellers. ♦ Industry products are not easily differentiated.

· The most valuable customer isn’t necessarily someone who buys a lot. In this socially charged

4. External Threats: Where close substitute things exist in a market, it enhances the likelihood of customers changing to decisions considering cost increases. This reduces both the vitality of suppliers and the interest of the market.

This is probably the most overlooked, and therefore most damaging, element of strategic decision making. It's imperative that business owners (us) not only look

Bargaining powers of buyers: weak buyers are fragmented, no buyer has influence over price or product.