What are the factors for competitors?
- Many competitors of equal size/capability
- Low Industry growth rate/
- Exit barriers
What are the solutions to competition factors?
- Growth
- Acquisition of competitors
- Differentiation
What are the factors for suppliers?
- Few suppliers
- Few good substitute suppliers/inputs
- High switching costs
- Threat of forward integration
What are the solutions to supplier factors?
- Alliance
- Internal supply
- Long run: redesign product or needed input
What are the factors for buyers?
- Few/concentrated buyers
- Standardized products; low switching costs
- Discretionary purchase/ importance of product
- Buyer information
- Threat of backward integration
What are the solutions to buyers factors?
- Form alliance with other sellers
- Strong marketing/ differentiation
- Create switching costs; lock in customers
- Create information asymmetries
What are the factors for substitutes?
Many good substitutes
Low switching costs
High buyer propensity to substitute
Improvements in price-performance trade-off
What are the solutions to substitutes?
Strong marketing/ differentiation
Lock in customers
What are the factors for new entrants?
Cost-related:
Economies of scale
Capital requirements
Cheap supply sources
Customer-related:
Switching costs/brand loyalty
What are the solutions to new entrants?
Grow to achieve scale
Control distribution network
Differentiate; create brand loyalty & identity
Lock customers in
