ࡱ> 685` 6bjbjss 4& qh4$-,,,,,$hK t",,o,,JT,  pwN 0-(, | T TXq-D($Ld Porters Five Forces and Factors that Impact the Strength of the Forces Threat of New Entrants Economies of scale Product differentiation Capital requirements Switching costs faced by customers if they were to switch to another supplier of the good Access to distribution channels (e.g., if the entrant cannot secure a way to distribute its product, it is a barrier to their entry) Cost advantages independent of scale (e.g., other cost advantages other than capturing economies of scale) Proprietary technology: secret or patented technology Managerial know-how: tacit knowledge Favorable access to raw materials: low cost access to critical raw materials Learning-curve cost advantages Government regulation of entry Threat of Rivalry Large number of competing firms that are roughly the same size This leads to price competition Slow industry growth Lack of product differentiation High exit barriers Capacity added in large increments If, in order to obtain economics of scale, production capacity must be added in large increments, an industry is likely to experience periods of oversupply after new capacity comes online. This leads to price cutting. Threat of Substitutes The availability of substitutes from other industries (e.g., in the auto manufacturing industry, substitutes come in the form of public transportation, bicycles, flying, walking, etc.). Threat of Suppliers Suppliers industry dominated by a small number of firmsso there are only a few suppliers Suppliers sell unique or highly differentiated products Suppliers are not threatened by substitutes Suppliers threaten forward (vertical) integration If suppliers can start a company whereby they use the products/services they produce, they become more powerful because they are not as dependent on those purchasing the products/services (e.g., tire manufacturing companies now sell their tires via retail stores and are therefore not solely dependent on auto manufacturers to purchase their tires as they assemble the vehicles). Firms are not important customers for suppliers Threat of Buyers Number of buyers is small Because there are few buyers, they can have more power over those providing the goods. Large-volume buyers are also powerful. Products sold to buyers are undifferentiated and standard If the goods are commodities, buyers can always find alternative products Buyers are not earning significant economic profits If buyers are not earning high economic profits, they are 1) likely to be very price sensitive, and 2) their simple ability to afford higher-priced goods is low. Buyers threaten backward (vertical) integration If buyers can easily backward integrate (e.g., produce the goods or perform the service themselves) this gives them power  Power of Buyers Threat of Substitutes Threat of New Entrants Power of Suppliers Threat of Rivalry The results of our Porters Five Forces analysis tell us if the industry is attractiveif we should consider starting a new venture within the industryas well as how likely it would be for our firm to capture long-term profitability should we enter the industry. -:GHI`{| ) I ~ ¾¾ª¢ž•‘žž|uqhw3 hrhrhr hB5hBhB5h=h?Ah% h\D5hJkh-h_Bh/hIKh bh hoh| h\Dh\Dh\D5hOLhCJhOLhm 5CJhOLh#/t5CJhOLh5CJhOLh\D5CJ(HI`s " H ) I ^  & F p^gd%h^hgdJk & F p^gd- & F ^gd\D & F hh^hgd\D$a$gd5^ ~ a b v 5gz & F p^gdsGn & F ^gdB & F ^gd$gdJk & F ^gdr & F hh^hgdB^gdJk & F p^gd\D & F ^gd\D I Q _ ` a b u v fx"*%?ABMQvGV]ʽʹʽʡ{w{w{hbmh'hh hJk6hh] hb5 hJk5 h"-h"-hJkhv4hWhhLh6phsGn hB6h$h%:hB hB5hBhB5hBhJk5 hrhrhfh[h1hihw35>*.%?BvHzr$a$gd9gdw & F p^gd' & F p^gdh & F p^gdK_ & F p^gd] & F ^gdJk & F hh^hgdJkh^hgd"- & F ^gd"- 456h$s7hihCjh7UmHnHuhwhbm*+3456gdw$a$gd9 21h:pQ/ =!"#$% @@@ NormalCJ_HaJmH sH tH DAD Default Paragraph FontRiR  Table Normal4 l4a (k@(No Listjj 1 Table Grid7:V0(@Tgp6 (@Tgps6 & z z6 HI`s"H)I^~abv 5g%?B v  H   + 7 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ HI`s"H)I^~abv 5g%?B v  H     * + 3 4 7 0@0 0 0I 0I 0I 0I 0I 0I 0 0 0 0 0I0 0 0 0 0 0 0 0 00 0 00 0 0b 0b 0b 0b 05 0b0 0 0 0% 0 0 0 0B  0 0 000h000000000GG 6 ^ 6 5 8 @&(  T S.K' #" |` _(t" #" As#%T  # &J &` TH #" T  # Tx ZB  S DxH&` ||) #" __(T  # X |) ZB  S D|L &` 8T\C #" 8\T  # 8T\p ZB  S DsC&` &J(# #" &Jt"T  # &X J(# ZB  S DX 4  "$ 'h  3 "`{$S.K' B S  ? 6 |(?t  7  + 2 7      ) * 4 7   7 >tοN^`o(. ^`hH. pLp^p`LhH. @ @ ^@ `hH. ^`hH. L^`LhH. ^`hH. ^`hH. PLP^P`LhH.>t         POiCQQe Bo!P94#& '"-K.7$s7a>\D@JOLK_ bCkgkbmHEnsGn[p#/tJk [%:d v'?A6pwUIw316`re4]1IK%v4''-iWL_B3m $=| W5QhJk fWon'us%b/@G6 `@UnknownGz Times New Roman5Symbol3& z Arial"hvsf%c&;f<') ) 1r4 3qHX)?\D2Porter s Five ForcesDiane SullivanSBA Oh+'0 ( H T ` lxPorters Five ForcesDiane Sullivan Normal.dotSBA60Microsoft Office Word@r@а@]@MfN) ՜.+,0$ hp  ,UCF - College of Business Administration  Porters Five Forces Title  !"#$&'()*+,./012347Root Entry FPrwN91Table WordDocument4&SummaryInformation(%DocumentSummaryInformation8-CompObjq  FMicrosoft Office Word Document MSWordDocWord.Document.89q