Structural analysis of competitive forces

Porter argues that “understanding industry structure must be the starting point for strategic analysis”.

The collective strength of 5 process determinate the state of competition and there for the ultimate profit potential with in an industry.

1.     Rivalry among the competitor: Rivalry among the competitor mean company within an industry gain market share from each other.

• The number and relative size of competitor within and industry.
• Cost condition
• The threats of growth
• High exist barriers

2.     The threat of entry

• New in turns
• New capacity
• New resources
• Sources of barriers
• Product deference
• Economic of scale
• Absolute cost advantage
• Capital requirement

3.     Bargaining Power of Buyers: Bargaining power of buyer’s means the ability of the buyer to down the price (include raw material) and demand high quality and high standard.

4.     Bargaining Power of Suppliers: Bargaining power of suppliers refers to the ability to rise price (include raw material) and try to lower the input quality.

5.     Threat of substitutes: Depeche on the propensity of the buyer to substitutes, swishing cost. The relative rise and performance of substitutes.