Please enable JavaScript.
Coggle requires JavaScript to display documents.
Porters 5 forces (Suppliers Bargaining power of suppliers (Analysing the…
Porters 5 forces
Suppliers
Bargaining power of suppliers
Elements to consider
Brand reputation
Geographical coverage
Product/service quality
Management of the bidding process
Analysing the bargaining power
Pricing power
The existence (or not) of agreements of suppliers to control the market
Their size
The existence (or not) of substitutes)
The importance of the products supplied in relation to the pursuit of the business organisation in question.
Buyers
Bargain power of buyers
If a business has only one big customer, its economic performance will be very much related to the choices and performances of this one big customer
Likely to be more risky than a situation where the
customer base is more widespread
Potential entrants
Threat of new entrants
If in an industry there are business organisations obtaining good profits, it is likely that there will be space for other business organisations to enter the market and make profits
The validity of this assumption depends on several factors
Entering in an industry typically requires investment in fixed assets of various types.
Costs known as 'sunk costs'
Def -
past costs that have been sustained by an organisation entering a market that cannot be recovered if that organisation decides to exit the market
The existence of sunk costs can create entry barriers in several industries
Reaching the level of channel distribution is almost impossible
This has been reduced by the role of the internet and online shopping
Industry competitors
Rivalry among existing firms
Analysis of industry competitors
Market share of different firms can inform us about the degree of
concentration of the industry considered
Can be measured in terms of the % of the total revenues of a firm against the total revenues of all the firms operating in a specific industry
If there are many firms with more or less the same market share, the market is close to perfect competition with the other extreme being a monopoly
The diversity among competitors
Cost structure
Substitutes
The threat of substitutes
Def -
goods and/or services that might address in a
different way the same customer as the products offered by a given business organisation