Number of slides: 10
Porter’s five forces model is one of the most complete business tools for analyzing the competitive environment where a company performs. The five external forces considered in this framework are Competitive Rivalry, Threat of New Entry, Buyer Power, Threat of Substitution, and Supplier Power. Use the Porter’s five forces model to conduct an analysis of your industry and prepare the best strategy to lead the market.
The easy access to multiple suppliers is beneficial to your business. It means you have the power to negotiate better conditions and prices. In the opposite situation, suppliers may have a great power over your production process and affect the profitability of your business.
The bargaining power of buyers analyzes the control customers have over prices in a certain industry. For example, if there are multiple sellers with the same product, customers can easily switch to the cheapest option. On the other hand, products highly differentiated makes it harder for buyers to force changes in the existing price.
Porter’s threat of new entrants refers to potential competitors and its power to reach your market. This directly affects the profitability of your industry. As you know, the more competitors in the market, the less each one receives. Then, an industry with strong barriers to entry protects your company’s position.
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