Porter’s Five Forces Model: To assess the potential for profitability in an industry, the competitive forces within the environment is analyzed by the Porter’s Five Forces. Buyer Power – The ability of the buyers to affect the price that they need to pay for an item. Supplier Power – The ability to influence the prices that are charged for the suppliers. Threat of substitute products or services – It will be high when there are many alternatives to a product or service and it will remain low when there are very few alternatives from which to choose. Threat of new entrants – It will be high when it becomes easy for new competitors to enter a market and it will remain low when there are some entry barriers to enter a market. Rivalry among existing competitors – It will be high when the competition is fierce in the market and it will remain low when competition becomes more complacent.

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Chapter 2, Problem 5MBD

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Porter’s Five Forces Model:

To assess the potential for profitability in an industry, the competitive forces within the environment is analyzed by the Porter’s Five Forces.

Buyer Power – The ability of the buyers to affect the price that they need to pay for an item.

Supplier Power – The ability to influence the prices that are charged for the suppliers.

Threat of substitute products or services – It will be high when there are many alternatives to a product or service and it will remain low when there are very few alternatives from which to choose.

Threat of new entrants – It will be high when it becomes easy for new competitors to enter a market and it will remain low when there are some entry barriers to enter a market.

Rivalry among existing competitors – It will be high when the competition is fierce in the market and it will remain low when competition becomes more complacent.

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