Do you want to determine the attractiveness of a particular industry? Get in touch with our market research experts! Sir Tel: Fax: Email The attractiveness of an industry depends on five competitive forces, so it is important to ensure that the Five Forces model applies to the industry as a whole and not just to your own company. necessary here, which Porter describes as a group of companies producing products that are close substitutes for each other. The stronger the five competitive forces, the weaker the attractiveness of the industry. In the following, the five forces are explained in more detail and the strengths and weaknesses of the five forces model are discussed, as this approach is well suited as a structural element for industry analysis.
Please click here to receive marketing and enable this Philippines WhatsApp Number List content Five Forces of Industry Five Forces of Industry Competition In many industries, industry competition is the most important factor in determining an industry's attractiveness. Industry competition depends on how many similar competitors are active. How strong the growth of the industry is. How many competitors are active in the diverse offerings. Whether there is a high strategic risk. Whether there are high market exit barriers. Threat of new entrants Highly rewarding industries attract new entrants who want to share in the profits.
With the increase of strong competitors, the profitability of the industry has generally declined. The strength of new entrants can be determined by factors including: Are there barriers to entry? Are there market rules? Are there high capital requirements to enter the market? Is it easy to generate economies of scale? How strong is the product differentiation? Are customers incurring high costs when switching suppliers? Supplier strength The strong bargaining power of suppliers will reduce the profitability of the industry. With a strong bargaining position, suppliers can raise prices, reducing profits for other companies. When an industry is dominated by a few suppliers, there is a strong supplier power. The industry plays very little against suppliers.