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FIVE FORCES ANALYSIS: WORKSHEET

(Industry Attractiveness Analysis from the Perspective of Major Incumbents )
I. Barriers to Entry and/or Mobility
Factor

Yes
()

Comment/Support

Large firms do not have a cost or performance advantage in

your segment of the industry. For example, costs do not
decline significantly with volume. (No economies of scale)

Large firms have cost/performance advantage.

There are no experience curve economies in this industry.

(This is different from economies of scale. The existence of
experience effects in an industry means that incumbents are
able to have lower costs due to past learning and experience,
and that it would be difficult for less experienced firms to gain
the same level of performance without going through the
same learning process.)

Incumbents have important knowledge

pertinent to recruitment as experience
is critical to success and they have more
information with relation to trends in
specific regions

There are no proprietary product differences in the industry.

(For example, existing companies products are not protected
by patents)

Most pet products do not have patents

There are no established brand identities in the industry.

(Lack of brand equity for incumbents)

There are many prevalent identities such

as PetCo and Pet Smart

Not much capital is needed to enter the industry. (For

instance, used equipment might be available, as in the airline
industry, to start operations)

Low Capital intensity according to study.

Newcomers to the industry will be able to access existing

distribution channels.

"Existing and well-established dist. relati-

Newcomers to the industry will have little difficulty in obtaining

the necessary inputs and resources (e.g., skilled people,
materials, or suppliers) to start business operations.

onships may deter potential operators"

Obtaining necessary inputs and resources
will be difficult

The industry rate of growth is high.

2.2% Annual growth between 09-14

The industry has well-defined product standards or

specifications, which newcomers can implement.

Newcomers can implement well-defined

product standards/spec.

Newcomers to the industry will be able to obtain the

necessary licenses and permissions to start operations.

Able but costs are high.

The industry offers newcomers one or more potential point of

entry. (Incumbents havent attempted all possible viable
strategies in the industry)

Niches currently unfilled by PetCo and

Pet Smart are available entry points

The industry has no history of retaliation by incumbents

against new entrants. Industry economics (e.g., low fixed,
high variable cost, low level of consolidation) is such that
incumbents dont typically react to new entries.

No history of retaliation by incumbents

against new entrants.

Note: The greater the number of NO checks, the more attractive the industry to incumbents.

Source: Format adapted from Mason Carpenter, University of Wisconsin

at Madison. Modified January 2005
1

No
()

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II. Bargaining Power of Buyers

Factor

Yes
()

Comment/Support

No
()

The buyer industry is more consolidated than my industry.

Buyers buy in large quantities.

Buyers typically buy for current needs

My product is a small part of the buyer's cost of inputs.

Products account for large share of ownership cost of input.

The buyer can purchase the same products
for more convenient supermarket locations.

The buyer does not face any significant costs in switching

suppliers. (That is, my buyers can easily purchase from my
competitors.)

Typically pet supply buyers need limited

information

Does the buyer need a lot of important (technical) information

to inform its purchasing decision? (In such situations, buyers
tend to be more knowledgeable about what they are buying.)
The buyers can vertically integrate backwards into your
business.

III. Bargaining Power of Suppliers

Factor

Yes
()

Comment/Support

The supplier industry is more consolidated than my industry.

My business is not important to the suppliers.
The quality of inputs is critical to my finished product.
My inputs (materials, labor, supplies, services, etc) are unique
or differentiated. That is, I cannot switch suppliers quickly and
cheaply.
I don't have many supplier alternatives.
My suppliers can vertically integrate forward into my business.

Source: Format adapted from Mason Carpenter, University of Wisconsin

at Madison. Modified January 2005
2

No
()

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IV. Threat of Substitutes

Factor

Yes
()

My customers have one or more substitutes available to

them.(For example, high fructose corn syrup is a substitute
for sugar in many industrial applications.)

Comment/Support

No
()

There are many substitutes for pet supplies

and toys

At least one of the substitutes performs well and could pose a

threat to my business.

There is relatively little cost in switching

suppliers

My customers will not incur much costs or critical

uncertainties in switching to a substitute.

V. Rivalry Among Existing Competitors

Factor

Yes
()

Comment/Support

No
()

My industry is not growing rapidly or the industry is in the

decline stage of its life cycle.

Industry growth is steady at approx. 2.2%

The industry is fragmented and exhibits boom-and-bust

cycles.

Pet store industry is highly fragmented but

volatility is low.

The industry has excess capacity, or the industry is cyclical

with intermittent excess capacity.

Capacity is generally fulfilled.

The industry suffers competition from companies based in

low-cost locations.

Competitors compete within geographic

locations.

There are high exit barriers.

There are no significant exit barriers for

companies in the industry
Pet Smart and Pet Co dwarf competition.
Most others are sole proprietorships.
Big chains generally sell the same products.

Major competitors in my industry are of comparable size.

There are no significant product differences and brand
identities among the major competitors.
My competitors are mostly specialized in my line of business
and are not diversified.

Many small competitors are specialized

Source: Format adapted from Mason Carpenter, University of Wisconsin

at Madison. Modified January 2005
3

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Overall Ratings of the Five Forces

Force

Yes
(# Checks)

Comment/Support

(Relative to the Power of Incumbents)

Barriers to entry/mobility
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitutes
Rivalry among incumbents
Total No. of Checks
Note: The greater the number of NO checks, the more attractive the industry is to incumbents.

Conclusions About Industry Attractiveness

Explain the implications and interpretations of your analysis.
(Take this part to the body of the paper)

Source: Format adapted from Mason Carpenter, University of Wisconsin

at Madison. Modified January 2005
4

No
(# Checks)