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Porter's Five Forces of Competition

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Added on  2021-04-21

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International business Page | 4 RUNNING HEAD: International business [Date] [Date] Student details email id Student details email id International Business International Business Porter’s five forces of Competition This model is given by Michael Porter to determine the industry structure and to fight the competition with the help of five forces of competition (Juneja, 2018). The factors which influenced the bargaining power of the customers • Buyers in the market • Buyer’s size • Order size • Cost of switching • Substitutes availability • Price

Porter's Five Forces of Competition

   Added on 2021-04-21

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[Date]RUNNING HEAD: International businessStudent detailsEMAIL IDInternational Business
Porter's Five Forces of Competition_1
I n t e r n a ti o n a l b u s i n e s sP a g e | 1Porter’s five forces of CompetitionThis model is given by Michael Porter to determine the industry structure and to fight thecompetition with the help of five forces of competition (Juneja, 2018). Lesser attractive marketand lower profitability refers to stronger five forces.The five forces can be explained as follows:Bargaining power of buyerIf the customers have good bargaining power they will bargain at the time of purchasing that willultimately lead the seller towards loss. The factors which influenced the bargaining power of thecustomers•Buyers in the market•Buyer’s size•Order size•Cost of switching•Substitutes availability•Price sensitivity of demand•Threat of backward integrationBargaining ability of suppliers If the buyers have good bargaining power, this force allows the manufacturers to supply high-priced or inferior quality products to the consumers. Threat of forward integration does exist inthis case. The bargaining ability of the supplier gets affected from the following factors •Suppliers in the market•Size of the supplier•Ability to find substitutable inputs•Scarcity of the inputs
Porter's Five Forces of Competition_2
I n t e r n a ti o n a l b u s i n e s sP a g e | 2•Cost associated with switching•Forward integration threatThreat posed by substitutesSubstitutes have the ability to put high prices of the commodities (Juneja, 2018). This force ofPorter gets influenced by the following factors:•Availability of close substitutes•Cost of switching•Quality of the substitutesThreats of new entryPotential producers are the ones, who are not in the same business line currently, but may enter ifgiven an option. To sustain in the competition, the costs have to reduce (Porter, 2016). This forceis closely linked to the entry barriers like:•Economies of scale•Loyalty towards the brand•Government Regulations•Absolute Cost Advantage•Strong Capital base (Juneja, 2018)Competitive rivalryHigh level of competition establishes a threat to the profits of the firms. The strength of rivalrycan be expressed as a function of:•Number of exit barriers•Fixed cost prevailing in the market•Global customers•Presence or absence of switching costs
Porter's Five Forces of Competition_3

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