MICHAEL

PORTER’S FIVE
FORCES
GROUP NO. 13
M-19-19
M-19-25
M-19-31
M-19-57
PORTER’S FIVE FORCES

● Framework to analyze the level of

competition.
● Useful when starting a new business or
entering a new industry sector.
● The state of competition in an industry
depends on five basic forces shown
alongside.
 Helps determine the profit potential of an industry and
thus its attractiveness.

If the five forces are intense (eg. Airline industry),

PORTER’S FIVE almost no company in the industry earns attractive
returns on investments.
FORCES

If the forces are mild however (eg. Soft Drink industry),

there is room for higher returns.
 ● Analyzes to what extent the customers are

CUSTOMER able to put the company under pressure.

BARGAINING POWER ● Higher the power lower is the company’s

profitability potential.
● Factors that influence the power:
➔ Number of customers
➔ Differentiation of products
➔ Buyer’s information availability
➔ Switching costs
 ● Analyzes how much power and control a

SUPPLIER BARGAINING company’s supplier has to raise its prices or to

POWER reduce the quality of purchased goods and

services.
● Higher the power lower is the company’s
profitability potential.
● Factors that influence the power:
➔ Number and size of suppliers
➔ Differentiation of products
➔ Strength of distribution channels
➔ Switching costs
 ● New entrants in an industry bring new

THREAT OF NEW capacity and the desire to gain market share.

ENTRANTS ● The seriousness of the threat depends on the

barriers to enter certain industry.
● The higher these barriers to entry, the smaller
the threat for existing players.
● Examples of barriers to entry are:
➔ Need for economies of scale
➔ High customer loyalty for existing
brands
➔ Large capital requirements
➔ Government policies
➔ Need for cumulative experience
 ● Every product that serves a similar need for

THREAT OF customers is a substitute.

SUBSTITUTES ● Existence of many such products can increase

the propensity of customers to switch to
alternatives..
● Factors that influence the power:
➔ Price-performance comparison
➔ Buyer’s switching costs
➔ Product differentiation
➔ Number of substitute products available
in the market
 ● Examines how intense the current competition

INTERNAL is in the marketplace.

COMPETITION ● Determined by the number of existing

competitors and what each competitor is
(RIVALRY)
capable of doing.
● The more intense rivalry lower is the
attractiveness of the industry.
● Factors that influence the power:
➔ Number of competitors
➔ Industry growth
➔ Barriers to exit
PORTER’S FIVE FORCES ANALYSIS BY
ZOMATO

1 2 3 4 5
CUSTOMER SUPPLIER THREAT OF NEW THREAT OF INTERNAL
BARGAINING BARGAINING ENTRANTS SUBSTITUTES COMPETITION
POWER POWER (RIVALRY)
- Strong brand name of - Limited substitutes
- Presence of various - Online media, app existing players (JustDial,Google Maps) - Foodpanda, BURP!,
competitor apps, thus ratings/reviews, TinyOwl, Yumist etc are
easy for customers to restaurants etc are - Advanced technology - Reviews, photos, menu the competitors
switch. suppliers positively affects listings and user
Zomato engagement gives - Large sales team,
- Zomato an obvious - They can be Zomato an added undistributed focus huge
choice because of the manipulated and hence - Geographical factors advantage investments etc make
specialized and this power is high affecting competition Zomato a better player
differentiated services
PORTER’S FIVE FORCES ANALYSIS BY
BRITANNIA
1 2
CUSTOMER
BARGAINING
POWER
- Price has a huge impact
due to intense competition
- Meager increase in
amount can lead to shift of
customers from one brand
to another
- Thus power of consumer
is considered high
SUPPLIER
BARGAINING
POWER
- Significant supplies are
wheat sugar and milk, thus
multiple suppliers available
- Cost of suppliers depend
on production of inputs
- Thus power of supplier is
considered moderate.
3 4
THREAT OF NEW
ENTRANTS
- Large capital required
and its difficult to possess
the distribution channels
- Government regulations
quite unappealing
- But huge revenues
expected in baking
industry
- Thus the threat of new
entrant is moderate
5
THREAT OF INTERNAL
SUBSTITUTES COMPETITION
(RIVALRY)
- Substitutes like savory
snacks,crisps,cereals,fruits - Large number of
etc are available competitors including
Parle and ITC for biscuits
- Diet and weight industry
conscious customers might
shift from dairy products - Nestle, Amul are the
competitors for dairy
- Thus threat of substitutes products
is moderate
- Thus rivalry is considered
to be intense
THANK YOU
!!