Five Forces in Porter's Competitive Position Analysis PDF

FIVE FORCES IN PORTER’S Prepared by: Ma’am Gen Lareza COMPETITIVE 11.3.24 POSITION ANALYSIS. I. OBJECTIVES BY THE END OF THIS LESSON, STUDENTS WILL BE ABLE TO: 1. Identify and explain each of the Five Forces in Porter’s Competitive Position Analysis....

FIVE FORCES IN PORTER’S Prepared by: Ma’am Gen Lareza COMPETITIVE 11.3.24 POSITION ANALYSIS. I. OBJECTIVES BY THE END OF THIS LESSON, STUDENTS WILL BE ABLE TO: 1. Identify and explain each of the Five Forces in Porter’s Competitive Position Analysis. 2. Analyze the impact of each force on an industry’s profitability and competition. ORIGIN OF PORTER'S FRAMEWORK - 1979 - Michael E. Porter - to offer a strategic tool that aids businesses in identifying and analyzing the competition level within their industry.  UNDERSTANDING INDUSTRY RIVALRY Industry rivalry is the competition between companies in the same industry for market share. high industry rivalry = decreased profits industry rivalry is low = companies may enjoy greater profit margins and stability Consider factors: the number of competitors, their relative size, and their capabilities. ANALYZING THREAT OF NEW ENTRANTS New competitors have the potential to enter your industry and disrupt the market dynamics. Consider the following: high capital costs or does it require specialized knowledge? strict regulatory requirements strong brand recognition customer loyalty lower prices quickly EVALUATING BARGAINING POWER OF BUYERS * ability of customers to put the The factors that impact the bargaining power firm under pressure, which also of buyers include: affects the customer's sensitivity Availability of substitutes to price changes. Level of competition in the market consider factors: Cost of switching suppliers Availability of information about prices and quality *quantity of buyers Size of the buyers *importance of each individual Ability to purchase in large quantities buyer to your business, Ability to access credit *cost to them to switch from your Ability to differentiate their products and services products to those of a rival. Government regulations and policies  ASSESSING SUPPLIER POWER Analyzing supplier power is a critical step in understanding the competitive forces that shape your industry. Number and Size of Suppliers Uniqueness of Service or Product Switching Costs IMPACT OF SUBSTITUTE PRODUCTS *If there's a shift in customer preference towards a substitute product, it can dramatically decrease your sales. *price of substitute products also plays an essential role. *If your product is unique, high- quality, and well-branded, it can withstand the pressure from substitutes. *Stay proactive, not reactive. Application of Porters Five Forces 1. Identify Industry Players 2. Assess Buyer and Supplier Power 3. Evaluate the Threat of New Entrants and Substitutes Click icon to add picture Identify the decision to be STRATEGIC DECISION-MAKING made and its significance. PROCESS both internal and external BENEFITS OF USING THE FRAMEWORK *ability to anticipate shifts in the industry. *improves your risk management. * foster innovation within your organization. -