Page 34 - Microsoft Word - 00 P1 IW Prelims.docx

Chapter 2

Porter’s 5 forces and performance management

The organisation should consider:

 how to measure the forces, for example possible metrics include:

– threat from potential entrants: brand loyalty, % revenue patent protected

– competitive rivalry: market share, market growth

– threat from substitutes: price of substitutes, quality of substitutes

– buyers’ bargaining power: number and size of buyers, switching costs

– suppliers’ bargaining power: number and size of suppliers

 how to manage the forces

 how to monitor the forces using suitable performance indicators

Illustrations and further practice

Now read Illustration 2 from Chapter 2 of the Study Text

24