Porters 5 Forces Essay
Porters 5 Forces
1) New Business / Threat of New Entrants
– Changing Conditions in PESTEL, Product, Service differences, brand identity, access to distribution, necessary resources, learning curve, inertia of existing markets. Expected retaliation, switching requirements, scale economics and experiences. Capital requirements.
Example: Upcoming smartphone known as the OnePlus One from a completely new firm. Cheaper than other firms such as Samsung, Apple and HTC but the quality is just as good, if not better. http://www.cnet.com/…/oneplus-one-to-hit-general…/
2 + 3) Bargaining Power of Suppliers and Customers
Concentration & Number of Buyers, Switching costs & esp Relationships, Control of information, Forward and backward integration, threat of Vertical integration, availability of substitutes. Importance to others performance. Brand identity, marketing and purchasing incentives. Alliances, relationships and expectations.
The ability of suppliers to change the firms performance. Eg Samsung has increased costs now that their suppliers went on strike. http://www.clb.org.hk/…/workers-samsung-supplier-china…
Likewise the same thing refers to consumers, but I can’t of an example off the top of my head.
4) Threat of Substitutes
Sideways competition, Comparative price/performance, backing by rich competitor. Comparative technological life cycle. Benefits no product features.
Theres tons of substitute products in the smartphone industry of all ranges in price and quality, so that one is self explanatory.
5) Rivalry amongst Competitors
Aside from the other four forces, the nature of rivals also determine the intensity and degree of rivalry. Competitors with different values, vision, mission, strategy and operational effectiveness, combined with different perceptions and abilities of their senior managers will influence not only the degree of competition but also its patterns.
The intensity of competition is also elevated when;
– there are severally equally strong players such as Samsung vs Apple – Few chances for differentiation – They all know whats coming up and they all copy each other. Galaxy Gear, Moto 360, Apple iWatch (Rumored)