Source

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Porter five forces model
Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. With a little ada
balance of power in more general situations.

It works by looking at the strength of five important forces that affect competition:

Supplier Power: The power of suppliers to drive up the prices of your inputs.
Buyer Power: The power of your customers to drive down your prices.
Competitive Rivalry: The strength of competition in the industry.
The Threat of Substitution: The extent to which different products and services can be used in place of your own.
The Threat of New Entry: The ease with which new competitors can enter the market if they see that you are making good

By thinking about how each force affects you, and by identifying the strength and direction of each force, you can quickly a
ability to make a sustained profit in the industry.

How to use this spreadsheet

For each of the factors below, you should enter one of the following values -1,0 or 1. For each parameter it is defined whic

You can enter your values in the light-grey cells

Threats of new entry

Time and cost of entry
Specialist knowledge
Economies of scale*
Cost advantages
Technology protection
Barriers to entry

Competitive rivalry
Number of competitors
Quality differences
Other differences
Switching costs
Customer loyalty

Supplier power
Number of suppliers
Size of suppliers
Uniqueness of service
Your ability to substitute
Cost of changing
Threat of substitution
Substitute performance
Cost of change

Buyer power
Number of customers
Size of each order
Difference between competitors
Price sensitivity
Ability to substitute
Cost of changing

Economies of scale is the cost advantage that arises with increased output of a product.

TOTA
 little adaptation, it is also useful as a way of assessing the

.
king good profits (and then drive your prices down).

n quickly assess the strength of your position and your

fined which defines high or low.

in
lts
su

-1 0 1
Re

High Neutral Low -1 High Time and cost of entry

Much Neutral Little -1 Much Specialist knowledge
High Neutral Low -1 High Economies of scale*
Many Neutral Few -1 Many Cost advantages
Much Neutral Little -1 Much Technology protection
Many Neutral Few -1 Many Barriers to entry
-6 -- ###

Many Neutral Few -1 Many Number of competitors

Big Neutral Small 1 Small Quality differences
Many Neutral Few -1 Many Other differences
High Neutral Low -1 High Switching costs
High Neutral Low -1 High Customer loyalty
-3 -- ###

Few Neutral Many -1 Few Number of suppliers

Big Neutral Small -1 Big Size of suppliers
Very Neutral Not very -1 Very Uniqueness of service
Good Neutral Bad -1 Good Your ability to substitute
High Neutral Low 1 Low Cost of changing
 -3 -- ###

Good Neutral Bad -1 Good Substitute performance

High Neutral Low 1 Low Cost of change
0 0 0

Many Neutral Few -1 Many Number of customers

Big Neutral Small -1 Big Size of each order
Big Neutral Small 1 Small Difference between competitors
High Neutral Low -1 High Price sensitivity
Good Neutral Bad 0 Neutral Ability to substitute
High Neutral Low -1 High Cost of changing
-3 -- ###

-8 --
 Threats of new entry

- High Time and cost of entry

- Much Specialist knowledge

Threat of new entry

- High Economies of scale*
- Many Cost advantages
- Much Technology protection
- Many Barriers to entry

--

Competitive Rivalry

Supplier power -- -- --

Supplier power
Threat of Substitution

- Few Number of suppliers 0

- Big Size of suppliers
- Very Uniqueness of service Small Difference betw
- Good Your ability to substitute
- Low Cost of changing

Threat of substitution

- Good Substitute performance

- Low Cost of change
 Competitive rivalry

Many Number of competitors -

Small Quality differences -
Many Other differences -
High Switching costs -
High Customer loyalty -

Buyer power

Buyer power

Many Number of customers -

Big Size of each order -
Small Difference between competitors -
High Price sensitivity -
Neutral Ability to substitute -
High Cost of changing -