Porters five forces

PORTERS FIVE FORCES INTRODUCTION
* The nature of competition in an industry is strongly affected by suggested five forces
* Power buyers and suppliers + Power threats of entry andsubstitution more intense competition in the industry.
* Understanding the nature of its competitive environment successful in achieving its objectives and establishing strategies.
* CONCLUSION:* Understand the nature of the Porter’s five forces
* Identify the most important force for you
IN ORDER TO BE IN AN Stronger position to defend itself against any threats !!
FORCE 1:DEGREE OF RIVALRY
* Force that determines industry attractiveness
* Determines when the value created by a firm will be dissipated through head-to-head competition
* Higher in industrieswhere
* There is a threat of substitute products
* Existing power of suppliers and buyers in the market
* NOKIA’S CASE: HIGH.
* Motorolla , Sony-erirccson
* Growingmobile industry
* Diversity in the industry
* Intense advertising

FORCE 2: THREAT OF ENTRY
Both potential and existing competitors influence in average profitability of the firm
*The threat of new entrants is also based on the market entry barriers to prevent influx of firms
* Economies of scale, cost of entry, distribution channels…
* NOKIA,S CASE: HIGH
*Patents, rights
* Brand building

FORCE 3: SUBSTITUTES
* Different types of products or services to which customers can turn to satisfy the same basic need.
* The threat ofsubstitution is also affected by switching costs – that is, the costs in areas such as retraining, retooling and redesigning- that are incurred when a customer switches to a different type of product orservice.
* NOKIA’S CASE: HIGH
* Relative cost performance
* Buyer tendency to substitute

FORCE 4: BUYERS POWER
The most important determinants of buyer power are the size and the...