Michael Porter's Five Forces Model

1090 Words3 Pages

1. Describe Michael Porter’s model and its components. Pick an industry and describe how the different components of the model relate to the industry. Porter 's Five Forces model, it named after Michael E. Porter. He identifies and analyzes five competitive forces that structure every industry, helps to determine an industry 's weaknesses and strengths. There are five components of Porter 's five forces model i. Potential of new entry into the industry ii. Rivalry among existing firms iii. Bargaining power of buyer iv. Bargaining power of supplier v. Threat of Substitute Product Potential of new entry into the industry: A company 's power is also affected by the force of new entrants company into the market. Well established …show more content…

The bargaining power of buyers refers to the ability of buyers to bargain down prices charged by companies in the industry. Powerful buyers can alter the profit of an industry. So, bargaining power of buyer is a threat. Example- soap powder produce by Uniliver, the principal buyers of soap powder are supermarket chains and discount stores like Walmart, Terget have the avility to alter the profit of soap powder industry. Bargaining power of supplier: Suppliers the companies that provide inputs or row materials into the industry. The bargaining power of supplier refers to the ability of alterring product price by providing poor inputs or sevices. Powerful suppliers narrow down the profits out of an industry by raising the costs of companies in the industry. So, powerful suppliers are a threat. Example- Personal computer (PC) industry havily depends of Intel Corporation for micro processor. Threat of Substitute Product: It refers to products of different businesses or industry that can meet same customer needs. Example- the need of coffe sometime alternatively meet by the tea or soft drinks. So, tea or soft drinks companies can be threat for companies in cofee

Open Document