Industry Analysis the Five Forces - 6821 Words

Purdue extension EC-722 Industry Analysis: The Five Forces Cole Ehmke, Joan Fulton, and Jay Akridge Department of Agricultural Economics Kathleen Erickson, Erickson Communications Sally Linton Department of Food Science Overview Assessing Your Marketplace The economic structure of an industry is not an accident. Its complexities are the result of long-term social trends and economic forces. But its effects on you as a business manager are immediate because it determines the competitive rules and strategies you are likely to use. Learning about that structure will provide essential insight for your business strategy. Michael Porter has identified five forces that are widely used to assess the structure of any industry. Porter’s†¦show more content†¦Reducing the Bargaining Power of Suppliers Most businesses don’t have the resources to produce their own inputs. If you are in this position, then you might consider forming a partnership with your supplier. This can result in a more even distribution of power. For instance, Dell Computer uses partnering with its components suppliers as a key strategy to be the low-cost/high-quality leader in the market. This can be mutually beneficial for both supplier and buyer if they can: †¢ Reduce inventory costs by providing just-in-time deliveries, †¢ Enhance the value of goods and services supplied by making effective use of information about customer needs and preferences, and †¢ Speed the adoption of new technologies. Another option may be to increase your power by forming a buying group of small producers to buy as one large-volume customer. If you have the resources, you may choose to integrate back and produce your own inputs by purchasing one of your key suppliers or doing the production yourself. Factors Affecting the Bargaining Power of Suppliers Suppliers have the most power when: †¢ The input(s) you require are available only from a small number of suppliers. For instance, if you are making computers and need microprocessors, you will have little or no bargaining power with Intel, the world’s dominant supplier. †¢ The inputs you require are unique, making it costly to switch suppliers. If you use a certain enzyme in aShow MoreRelatedPorters Five Forcesï ¼ a Model for Industry Analysis-2porters Five Forcesï ¼ a Model for Industry Analysis-21752 Words   |  8 PagesPorter s Five Forcesï ¼ A MODEL FOR INDUSTRY ANALYSIS-2 (2006-04-27 16:38:39)[pic]è ½ ¬Ã¨ ½ ½ IV. Supplier Power A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry s profitsRead MorePorters Five Forces Analysis Of The Brewing Industry1421 Words   |  6 Pagesconsumption, and as such, is a fascinating industry to follow. By analyzing large and medium-sized brewers, we intend to provide an analysis of the current brewing industry, covering the topics of 1) Industry Structure and Attractiveness, 2) Key Success Factors and Influencers, 3) Environment and 4) Porter’s Five Forces. Our focal firm throughout the analysis will be the Boston Brewing Company. Industry Structure and Attractiveness Our definition of the brewing industry includes â€Å"alcoholic beverages madeRead MoreFive Forces Analysis of the Swedish Construction Industry1281 Words   |  6 PagesFive Forces analysis of the Construction Industry in Sweden â€Å"The authors conclude that the less competitive a market environment, the higher will be the amount of corruption by giving public servants the incentive to extract some of the monopoly rents through bribes.† (Lambsdorf, 1999) Industry background: The Swedish construction business consists of four main actors namely JM, NCC, PEAB and Skanska that historically have had exclusive rights to bid on large-scale governmental projectsRead MoreFive Forces Analysis of the Video Game Industry943 Words   |  4 PagesFive Forces Analysis of the Video Game Industry The video game industry is the economic sector involved with the development, marketing and sale of video and computer games. It includes video game consoles, game software, handheld devices, mobile games and online games. The video gaming industry has been growing exponentially in recent years with Sony, Microsoft and Nintendo competing for the higher profits in the market. This essay will analyze each of the five forces acting on the industry:Read More. Soft Drink Industry Five Forces Analysis:1734 Words   |  7 Pages. Soft Drink Industry Five Forces Analysis: Soft drink industry is very profitable, more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this, using the five forces analysis we can clearly demonstrate how each force contributes the profitability of the industry. Barriers to Entry: The several factors that make it very difficult for the competition toRead MoreThe Evergreen Five Forces Framework For Industry Analysis1804 Words   |  8 PagesAlthough as wanted by our teachers, this essay will be focused on the evergreen five forces framework for industry analysis set up by Mr. Michael Porter to ascertain the desirability of an industry along with its usefulness and limitations in the formulation of various strategies but first and foremost I’d like to throw some light on this very enlightened being, Mr. Porter, whose name is taken at least twice every lecture we attend (Not forgetting that the first two were totally on him only!). WhyRead MoreFive Forces Analysis of Retail Car Industry1840 Words   |  8 PagesModule Code: PICS01C Student Number: 7305-272-8 Due Date: 15 March 2011 [pic] a) Five-forces diagram for analysis of the retail car industry in the greater Johannesburg area 1. Competitive Rivalry Competitive rivalry exists between companies with the same or similar products/services and similar markets. Factors to be considered include: †¢ The number and size of competitors †¢ The rate of industry growth †¢ Differentiation and switching costs †¢ Fixed costs or perishable productsRead MorePorters Five Forces Model for Industry Analysis3909 Words   |  16 PagesThis essay is an attempt to apply the Five Forces Model for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979 that draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Within the ambit of Porter’s typology, this essay aims to analyze the attractiveness of industries for investment and seeks to identify their potential for change orRead MoreGlobal Clothing Industry Overview And Five Forces Analysis776 Words   |  4 PagesClothing Industry overview and five forces analysis From 2005 the liberalization textiles and clothing industry, the exports of this industry increased from 480 $ billion to 709 $ billion until 2012. (WTO.2005, 2013) The textiles and clothing industry accounts for a 4 per cent share in global merchandise exports. (The ILO, 2014) Garment industry has particularly characteristics, which selectivity and pertinence at production and market. (Adhikari, R. Yamamoto, Y. 2007) Garment industry providesRead MorePorter ‘Five Forces Analysis’ for the Banking Industry in Ghana3902 Words   |  16 PagesUndertake a Porter ‘Five Forces Analysis’ for an industry with which you are familiar (1000 words). Introduction This essay is aimed at analyzing Porter’s five forces for the banking industry in Ghana. It gives a brief introduction to the industry and provides a detailed application of the five forces to the industry. Porter’s Five Forces Analysis in the Ghanaian Banking Industry â€Å"Competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers