5 Forces Model of Competition

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  1. Threat of new entrants
    • Barriers to entry:
    • Economies of scale
    • Product differntitation
    • Capital requirements
    • Switching cost to buyers
    • Access to distribution channels
    • Other cost advantages
    • Incumbants defense of market share
    • Industry growth rate
  2. Determinats of Supplier Power
    • Suppliers concentration
    • Availabilty of substitute inputs
    • Importance of suppliers input to buyer
    • Suppliers product differentiation
    • Importance of industry to suppliers
    • BUyers switching cost to other input
    • Suppliers threat of forward intergration
    • Buyers threat of backward integration
  3. Rivairy Among Exsisting Firms
    • Number of competitory (concentration)
    • Relative size of competitors (balance)
    • Industry growth rate
    • Fixed costs vs. variable costs
    • Product differentiation
    • Capacity augmented in large increments
    • Buyers switching costs
    • Diversity of competitors
    • Exit barriers
    • Strategic stakes
  4. Determinats of Buyer Power
    • Number of buyer relative to sellers
    • Product differentiation
    • Switching costs to use other product
    • Buyers profit margins
    • Buyers use of multiple sources
    • Buyers threat of backwards integration
    • Buyer threat of forward integration
    • Importance of product to the buyer
    • Buyers volume
  5. Threat of Substitute Products
    • Relative price of substitute
    • Relative quality of substitute
    • Switching costs to buyers
Card Set
5 Forces Model of Competition
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