Porter's Five Forces Model AND ALL PPT.pptx

1. Porter's Five Forces Model PRECIOUS GRACE C. BRAVO PRINCESS KAY A. LIGAD ZAREN GRACE O. VISAGA JUNE 30, 2024

2. Introduction to Porter's Five Forces Developed by Michael E. Porter in 1979 Framework for analyzing the competitive forces within an industry Helps businesses determine industry attractiveness and inform strategic decisions

3. Definition of Porter's Five Forces A tool for analyzing the competitive forces that shape every industry Identifies five forces that determine the intensity of competition and profitability

4. Purpose of Porter's Five Forces To understand the dynamics of an industry To identify the strengths and weaknesses of an industry position To inform strategic decisions and gain a competitive advantage

5. Overview of the Five Forces

6. Competitive Rivalry Definition: The intensity of competition among existing competitors Examples High: Streaming Services Industry (e.g., Netflix, Disney+) Low: Commercial aerospace (e.g., Boeing, Airbus) Factors: Number of competitors, rate of industry growth, product/service differentiation

7. Threat of New Entrants Definition: The Threat of New Entrants is the ease with which new competitors can enter the market. Industries with high barriers to entry, such as significant capital requirements or strong brand loyalty, have a lower threat of new entrants. High: Pop-up coffee shops, Online retailing business Low: Airline Industry (e.g., high R&D costs, regulatory barriers) Factors: Economies of scale, brand loyalty, capital requirements, regulatory barriers

8. Bargaining Power of Suppliers Definition: Bargaining Power of Suppliers is the power suppliers have to drive up prices. When there are few suppliers or unique products, supplier power is high. High: Unique raw materials (e.g., oils, rare minerals) Low: Common commodities (e.g., local furnitures, bulk agricultural products) Factors: Number of suppliers, uniqueness of the product, switching costs

9. Bargaining Power of Buyers Definition: The Bargaining Power of Buyers is the power customers have to drive prices down. When buyers are few or purchase in large volumes, their power increases. High: Large retailers (e.g., SM Supermarket, Robinsons) Low: Telecommunications provider Factors: Number of buyers, purchase volume, availability of alternatives

10. Threat of Substitutes Definition: The Threat of Substitutes is the extent to which different products or services can replace existing ones. High availability of substitutes reduces industry attractiveness and profitability. High: Public transportation as a substitute for car ownership Low: Electric Utility Industry Factors: Availability of substitute products, price-performance trade-off, switching costs

11. Advantages of Porter's Five Forces Comprehensive analysis of industry structure Identifies key competitive forces Helps in strategic planning and decision-making Applicable to any industry

12. Disadvantages of Porter's Five Forces May oversimplify complex industries Static model; may not account for dynamic changes Focuses on external factors, neglecting internal capabilities May not be applicable to non-traditional industries

13. Critiques of Porter's Five Forces Some argue it lacks consideration for digital and rapidly changing markets May not fully capture the impact of globalization Limited focus on collaboration and strategic alliances Does not consider regulatory changes and technological advancements adequately

14. When to Use Porter's Five Forces When entering a new market or industry For strategic planning and competitive analysis To assess industry attractiveness and profitability During mergers and acquisitions to evaluate industry dynamics

15. Conclusion Porter's Five Forces is a valuable tool for understanding industry competition Provides insights into strategic positioning Useful for a wide range of strategic decisions