Page 138 - F1 - AB Integrated Workbook STUDENT 2018-19

Chapter 9

Porter’s five forces analysis

2.1 Porter’s five forces model

THREAT OF
NEW
ENTRANTS

POWER OF COMPETITIVE POWER OF

BUYERS RIVALRY SUPPLIERS

THREAT OF

SUBSTITUTES

 Competitive rivalry – will depend on the number and strength of
competitors, the level of fixed costs and the rate of growth in the industry

 Threat of new entrants – new entrants will bring extra capacity and intensify
competition

 Threat of substitutes – more substitutes makes it easier for buyers to switch
to other products

 Power of buyers – powerful buyers can force price cuts/quality
improvements

 Power of suppliers – can charge higher prices, forcing down profit margins

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