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Force Analysis
By:
Aditya Lal Pandey 19020841158
Elvin Varghese 19020841176
Radhika Chaddha 19020841193
Benjamin Samodar 19020841195
Introduction
• Porter’s five forces model is an analysis tool that uses five industry forces to
determine the intensity of competition in an industry and its profitability level.
• Once competitive force often affects the others thus all the forces need to be
considered and thought when performing an industrial analysis.
Porters 5 Forces Chart
THREAT OF NEW
ENTRY
Threat of New
Entry
This force determines how easy (or not) it is to enter a particular
industry. It is essential for existing organizations to create high barriers
to enter to deter new entrants. Threat of new entrants is high when:
BARGAINING
POWER
OF SUPPLIER
Supplier Power
Strong bargaining power allows suppliers to sell higher priced or
low quality raw materials to their buyers. Suppliers have strong
bargaining power when:
THREAT OF BARGAINING
SUBSTITUTES POWER OF
SUPPLIER
Threat of
Substitutes
This force is especially threatening when buyers can
easily find substitute products with attractive prices or
better quality and when buyers can switch from one
product or service to another with little cost.
Automotive Industry:
Threat of substitutes (WEAK)
THREAT OF BARGAINING
SUBSTITUTES POWER OF
SUPPLIER
Competitive
Rivalry
In competitive industry, firms have to compete aggressively for a market
share, which results in low profits. Rivalry among competitors is intense
when:
Although, Porter’s five forces is a great tool to analyze industry’s structure and use the
results to formulate firm’s strategy, it has its limitations and requires further analysis to
be done, such as SWOT, PEST or Value Chain analysis.
SIMULATION : 5 FORCES
FRAMEWORK
https://s3.amazonaws.com/he-assets-prod/interactives/057_porters_forc
es_framework/Launch.html
Limitations
• Existence of a perfectly competitive market
• Organizational core competencies.
• Disruptive innovations
• Parenting advantages
• Blue ocean strategies.
Thanks