Threat of New Entrants: Microeconomics teaches that profitable industries attract new competition until the downward pressure on prices has squeezed all the economic profit from the firms. Don’t forget to check out an example of a Porter’s Five Forces analysis of the Coca-Cola company.ġ. The five forces are (1) Threat of New Entrants, (2) Threat of Substitute Products or Services, (3) Bargaining Power of Buyers, (4) Bargaining Power of Suppliers, (5) Competitive Rivalry Among Existing Firms. The analyst uses conclusions derived from the analysis to determine the company’s risk from in its industry (current or potential). The five forces measure the competitiveness of the market deriving its attractiveness. Since its introduction in 1979, Porter’s Five Forces has become the de facto framework for industry analysis.
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