PORTERS 5 FORCES

Question 1

background

Answer 1

nature of competitive environments

strategic management must consider ONGOING process in which strategies are FORMULATED, IMPLEMENTED, REVISED CONTINUOUSLY

Question 2

michael porter

Answer 2

proposed business level strategies that are a RESULT OF 5 COMPETITIVE FORCES.
these forces help determine an ORGANIZATIONS POSITION when compared to competitors.

can be used to determine if its suitable to enter market.

INDUSTRY ATTRACTIVE TEST

Question 3

BARRIERS OF ENTRY

Answer 3

easier the entry, the lower industry profits

brand loyalty, economies of scale, and goverment regulations potential barriers

Question 4

BARGAINING POWER OF SUPPLIERS

Answer 4

CONCENTRATION of suppliers and AVAILABILITY of suppliers determines SUPPLIER POWER

few suppliers for important input can drive up prices

Question 5

Bargaining power of Customers

Answer 5

ability of customer to put firm UNDER PRESSURE and SENSITIVITY TO PRICE CHANGE

only a few large customers available to buy produce can drive down price = lower profits

Question 6

Threat of Substitutes

Answer 6

power of substitutes/alternatives affects cost changes. when a customer can subsitute different outputs from different customers, cannot demand high prices. profits lower

Question 7

intensity of rivalry

Answer 7

competitiveness. the more the competition, the lower the industry profits

low prices and high costs = less profits