Porters 5 Forces: An Analysis Of Porter's Five Forces
Porters 5 forces
Understanding the Tool
When looking at and trying to understand porters 5 forces the below must be understood and taken into consideration
1. The power of the suppliers. This means that if you have few supplier choices and the supplier provides key parts and services to you, you a very reliant on this supplier and they can dictate terms and price to you on the other hand if you have a wide choice of supplier you are in a better position to negotiate price and terms as you can change supplier quite easily.
2. The power of the customer. If you a reliant on a small number of customers in your business you do not have much room to negotiate as you needs these customers to keep your business going.
3. Competitive rivalry. This …show more content…
The threat of substitution. This can be described as a product or service that has similar benefits to a business as to what you are offering. It is the level of risk your company faces if your customer decides to switch product from your to another.
5. The threat of a new entry. This is the ability of competitors to enter the market you are operating. If there are few or no barriers to entry like little cost to enter and compete efficiently or if you little protection in your processes or technology, then competitors can enter the market quite quickly and weaken your market share of the industry. On the other hand if you have set up good barriers to entry then you are in a good position and take advantage of the situation.
The below example is taken from …show more content…
Business might differentiate their product by spending new product developments. They also might try to increase their production output to achieve a lower selling price through bulk. Also in some cases the business might just buy the competing business so they will not have the computation. Depending on the laws this might not be allowed as it can be infringing on competition laws.
Mission Statements
A mission statement will outline the purpose of a company it will also declare the company’s core purpose and it usually remains unchanged over time. A Good mission statement will differentiate what’s important and what is not important. It will also clearly state which market place the company will operate and how. It will also communicate to the companies employees what direction the company will take. A mission statement is different to a vision statement as a mission is goal to be accomplished and a vision statement is to be perused. A good mission statement should
Understanding the Tool
When looking at and trying to understand porters 5 forces the below must be understood and taken into consideration
1. The power of the suppliers. This means that if you have few supplier choices and the supplier provides key parts and services to you, you a very reliant on this supplier and they can dictate terms and price to you on the other hand if you have a wide choice of supplier you are in a better position to negotiate price and terms as you can change supplier quite easily.
2. The power of the customer. If you a reliant on a small number of customers in your business you do not have much room to negotiate as you needs these customers to keep your business going.
3. Competitive rivalry. This …show more content…
The threat of substitution. This can be described as a product or service that has similar benefits to a business as to what you are offering. It is the level of risk your company faces if your customer decides to switch product from your to another.
5. The threat of a new entry. This is the ability of competitors to enter the market you are operating. If there are few or no barriers to entry like little cost to enter and compete efficiently or if you little protection in your processes or technology, then competitors can enter the market quite quickly and weaken your market share of the industry. On the other hand if you have set up good barriers to entry then you are in a good position and take advantage of the situation.
The below example is taken from …show more content…
Business might differentiate their product by spending new product developments. They also might try to increase their production output to achieve a lower selling price through bulk. Also in some cases the business might just buy the competing business so they will not have the computation. Depending on the laws this might not be allowed as it can be infringing on competition laws.
Mission Statements
A mission statement will outline the purpose of a company it will also declare the company’s core purpose and it usually remains unchanged over time. A Good mission statement will differentiate what’s important and what is not important. It will also clearly state which market place the company will operate and how. It will also communicate to the companies employees what direction the company will take. A mission statement is different to a vision statement as a mission is goal to be accomplished and a vision statement is to be perused. A good mission statement should