Supplementary Slides Porters Five Forces

BUS362 IT-Enabled Business Transformation

Slide 1

Porters Five Forces

Michael Porters Five Competitive Forces (P5F) is an external environment analysis tool used to analyze the industry based on the intensity of each of the 5 forces. It is not to be used to analyze the company per se. The objective of this analysis is to determine if the industry is attractive (to the company) or not.
After analysis of each of the 5 forces, provide a sub-conclusion on whether if that force is low, medium or high. Use the template in the following slides as a guideline. Back-up your assertions/sub-conclusion with facts and/or data At the end of the analysis provide an overall conclusion (based on the sub conclusions of each of the 5 forces) on whether the industry as attractive or not.

BUS362 IT-Enabled Business Transformation

Slide 2

Porters Five Forces

Threat of New Entrants
Threat of New Entrants is HIGH when:
Economies of scale are: Product differentiation is: Capital requirements are:

High

Low
X X X

Switching costs are:

Ease of Access to distribution channels is: Cost disadvantages are:

X
X X

Government policies creating barriers are:

When you analyze a firms position, you put a tick either on High or Low side for each of the attributes given. If it happens that most of your ticks are in the same cells as the X, it implies High. Other than High, it could either be Low or :Medium

BUS362 IT-Enabled Business Transformation

Slide 3

Porters Five Forces

Bargaining Power of Buyers
Power of Buyers is HIGH when:
Concentration of buyers relative to suppliers is: Switching costs are:

High
X

Low

Product differentiation of suppliers is:

Threat of backward integration by buyers is: Extent of buyers profits is: Importance of suppliers input to quality of buyers final product is: X

X X

When you analyze a firms position, you put a tick either on High or Low side for each of the attributes given. If it happens that most of your ticks are in the same cells as the X, it implies High. Other than High, it could either be Low or :Medium

BUS362 IT-Enabled Business Transformation

Slide 4

Porters Five Forces

Bargaining Power of Suppliers
Power of Suppliers is HIGH when: Concentration of suppliers relative to buyer industry is: Availability of substitute products is: Importance of customer to the suppliers is: Differentiation of the suppliers products and services is: Switching costs of the buyer are: Threat of forward integration by the supplier is: High X X X Low

X
X X

When you analyze a firms position, you put a tick either on High or Low side for each of the attributes given. If it happens that most of your ticks are in the same cells as the X, it implies High. Other than High, it could either be Low or :Medium

BUS362 IT-Enabled Business Transformation

Slide 5

Porters Five Forces

Intensity of Rivalry
Intensity of Competitive Rivalry is HIGH when: High Low

Number of competitors is:

Industry growth rate is:

Fixed costs are: Storage costs are: Product differentiation is: X X

Switching costs are:

Exit barriers are: Strategic stakes are: X X

When you analyze a firms position, you put a tick either on High or Low side for each of the attributes given. If it happens that most of your ticks are in the same cells as the X, it implies High. Other than High, it could either be Low or :Medium

BUS362 IT-Enabled Business Transformation

Slide 6

Porters Five Forces

Threat of Substitute Products

Threat of Substitute Products is HIGH when: The differentiation of the substitute product is: Rate of improvement in priceperformance relationship of substitute product is:

High

Low

X
X

When you analyze a firms position, you put a tick either on High or Low side for each of the attributes given. If it happens that most of your ticks are in the same cells as the X, it implies High. Other than High, it could either be Low or :Medium

BUS362 IT-Enabled Business Transformation

Slide 7