9575352
Description
Mind Map by Tim Mitchell, updated more than 1 year ago
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Created by Tim Mitchell
over 8 years ago
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Porter's
Five Forces
- Buyer Power
- The ability of customers to
influence the price an organisation
can charge for its products/services
- A buyer's purchases are a high
proportion of the supplier's total
business or represent a high proportion
of total trade in that market
- A buyer makes low profit
- Quality of purch. is
unimportant or delivery
timing is irrelevant
- There are similar alternative
products available from
other suppliers
- A buyer's purchases are a high
proportion of the supplier's total
business or represent a high proportion
of total trade in that market
- The ability of customers to
influence the price an organisation
can charge for its products/services
- Supplier Power
- The ability of an organisation's
suppliers to demand higher
prices for products/services
- Degree to which switching costs apply
and substitutes are available
- Extent to which products offered have a
uniqueness of brand, technical performance
or design not available elsewhere
- Presence of one or two dominant
suppliers controlling prices
- Degree to which switching costs apply
and substitutes are available
- The ability of an organisation's
suppliers to demand higher
prices for products/services
- Competitive Rivalry
- Competition for customers can lead to price
wars, driving down prices and forcing high
expenditure on marketing/innovation
- Number and relative strength of
competitors. Competition in a market can
range from perfect competition to monopoly
- Perfect competition: the situation prevailing in a
market in which buyers and sellers are so numerous
and well informed that all elements of monopoly are
absent and the market price of a commodity is
beyond the control of individual buyers and sellers.
- Monopoly: Single organisation
offering good/service. Can demand
any price as no competition
- Perfect competition: the situation prevailing in a
market in which buyers and sellers are so numerous
and well informed that all elements of monopoly are
absent and the market price of a commodity is
beyond the control of individual buyers and sellers.
- Rate of growth. Where the market is
expanding, competition is low key
- If buyers can switch easily between
suppliers, competition is keen
- Where high fixed costs are involved companies will
cut prices to marginal cost levels to protect volumes,
and drive weaker competitors out of the market
- If the exit barrier (i.e. the cost of leaving the market)
is high, companies will hang on until forced out,
thereby increasing competition and depressing profit
- Number and relative strength of
competitors. Competition in a market can
range from perfect competition to monopoly
- Competition for customers can lead to price
wars, driving down prices and forcing high
expenditure on marketing/innovation
- New Entrants
- The relative ease of entry
into the market for new
companies or products
- The relative ease of entry
into the market for new
companies or products
- Substitutes
- If a lot of substitutes exist, prices
must be kept down to deter customers
for opting for those substitutes
- Substitutes refer to alternative options, such as train
travel or bus travel, rather than brands of smartphone
- Substitutes refer to alternative options, such as train
travel or bus travel, rather than brands of smartphone
- If a lot of substitutes exist, prices
must be kept down to deter customers
for opting for those substitutes
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