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CH:3 The Five-Forces Model - Coggle Diagram
CH:3
The Five-Forces Model
Bargaining Power of Suppliers
increased when there are:
Large numbers of suppliers
Few substitutes
Costs of switching raw materials is high
Backward integration
is gaining control or ownership of suppliers :!!:
Bargaining Power of Suppliers is increased when there are:
Large numbers of suppliers
Few substitutes
Costs of switching raw materials is high
Conditions that Cause Rivalry among competing firms
Conditions that Cause High Rivalry
High number of competing firms
Similar size of firms competing
Similar capability of firms competing
Falling demand for the industry’s products
Falling product/service prices in the industry
Cause
Rivals have excess capacity
Consumer demand is falling
Rivals have excess inventory
Rivals sell similar products/services
Mergers are common in the industry
Barriers Rivalry
Consumers can switch brands easily
Barriers to leaving the market are high
Barriers to entering the market are low
Fixed costs are high among firms competing
The product is perishable
Potential development of substitute products
Pressure increases when:
1- Consumers’ switching costs decrease
2- Prices of substitutes decrease
Potential Entry of New Competitors
what is?
Barriers to entry are important
Quality, pricing, and marketing can overcome barriers
Bargaining power of consumers
Consumer power is
higher where
products are
standard
or
undifferentiated
Customers
being concentrated or buying in volume
affects
intensity
of competition
.
Conditions Where Consumers Gain Bargaining Power
If buyers can inexpensively switch
If buyers are particularly important
If sellers are struggling in the face of falling consumer demand
If buyers are informed about sellers’ products, prices, and costs
If buyers have discretion in whether and when they purchase the product
:question:
Focus
on
competitive advantage of
strategies over
other firms
.
Most powerful
of the five forces
:!:
External Strategic
Management Audit
Environmental Scanning
Industry Analysis
Identify & evaluate factors beyond the
control of a single firm
Increased foreign competition
Population shifts
Ageing society
Fear of travelling
Sources of Competitive Intelligence
Internet
Employees
Managers
Suppliers
Customers
Resource Similarity
:question:
Extent to which the type and amount of a firm’s
internal resources
are comparable to a rival.
Potential development of substitute products
Pressure increases when:
Consumers’ switching costs decrease
Prices of substitutes decrease
Sources of External Information:
Published Sources
Unpublished Sources
Customer surveys
Market research
Published Sources
Journals
Reports
Books
Forecasting Tools and Techniques
:question:
Are educated assumptions
about future trends and events.
Techniques
Qualitative
Quantitative
Industry Analysis
External Factor Evaluation
Economic
Social
Cultural
Demographic
Environmental
