Porter’s Five Forces Model is one of the most popular frameworks in management. This framework is widely used across management disciplines specially so in case of Strategy and Marketing. . This is one model that has brought strategic management in the heart of management agenda. Porter’s Five Forces Model helps analyze competitive scenario in an industry. This framework helps determine industry profitability and can be used as one of the inputs while deciding to enter an industry. This famous framework was contributed by Michael E. Porter.
Determinants of supplier power
- Differentiation of inputs
- Switching costs of supplier and firms in the industry
- Presence of substitute inputs
- Supplier concentration
- Importance of volume to supplier
- Cost relative to total purchases in the industry
- Impact of inputs on cost or differentiation
Determinants of barrier to entry
- Economies of scale
- Proprietary product differences
- Brand identify
- Switching cost-Capital requirements
- Access to dissolution
- Absolute cost advantages
- Proprietary learning cure
- Access to necessary inputs
- Proprietary, low-cost product design
- Government policy
- Expected retaliation
Determinants of buying power
- Bargaining leverage-Buyer concentration vs. Firm concentration
- Buyer volume
- Buyer information
- Ability to backward integrate
- Subtitle product
- Pull-through
- Price sensitivity
- Price total purchases
- Product differences
- Brand identify
- Impact on quality perception
- Buyer profits
- Decision makers' incentives
Determinants of substitution threat
- Relative price performance of substitutes
- Switching costs
- Buyer propensity to substitute
Rivalry determinants
- Industry growth
- Intermittent overcapacity
- Product differences
- Brand identify
- Switch costs
- Concentration and balance
- Informational complexity
- Diversity of competitors
- Corporate stalkers
- Exit barriers