Five Forces
Topics 1----- Five forces: industrial analysis
How is it that even in the best-performing industries only some firms do well? What factors might explain differences in firm performance within the same industry?
5. (12-13)
(a) What are the determinants of firm performance
(b) Use a real life example to illustrate how five forces analysis may be used in practice
(c) Five forces are used to make decisions as whether to entry an industry or not.
1. five-forces analysis is a tool to analyze level of competition within an industry and therefore attractiveness of a market.
2. It help to Identify forces that must be countered in order to achieve superior firm performance
3.Make decisions regarding entering or exiting an industry
3.1.If you want to invest, see what industry is attractive.
3.2.Inside in an industry, you gain a complete picture of what’s influencing profitability in your industry.. E.g. where do you put your efforts to compete?
4. identifies the threats or forces to the profits. Firms may pursue several strategies to cope with these threats.
4.1, positioning. developing a cost or differentiation advantages to outperform their rivals
4.2, Seek an industry segment where the five forces are less severe.
Niche market.
4.3, Try to change the five force (entry deterrence strategy, increase switching costs, vertical integration or try to reduce internal rivalry)
Coca-Cola Company in relationship to its Coca-Cola brand.
Threat of New Entrants/Potential Competitors: Median Pressure
Entry barriers are relatively low for beverage industry: there is almost 0 consumer switching cost and very low capital requirement. There are more and more new brands appearing in the market with usually lower price than Coke products
However Coca-Cola is seen not only as a beverage but also as a brand. It has a very significant market share for a long time and loyal customers are not very likely to try a new brand beverage.
Threat of Substitute Products: Median to high pressure\
How is it that even in the best-performing industries only some firms do well? What factors might explain differences in firm performance within the same industry?
5. (12-13)
(a) What are the determinants of firm performance
(b) Use a real life example to illustrate how five forces analysis may be used in practice
(c) Five forces are used to make decisions as whether to entry an industry or not.
1. five-forces analysis is a tool to analyze level of competition within an industry and therefore attractiveness of a market.
2. It help to Identify forces that must be countered in order to achieve superior firm performance
3.Make decisions regarding entering or exiting an industry
3.1.If you want to invest, see what industry is attractive.
3.2.Inside in an industry, you gain a complete picture of what’s influencing profitability in your industry.. E.g. where do you put your efforts to compete?
4. identifies the threats or forces to the profits. Firms may pursue several strategies to cope with these threats.
4.1, positioning. developing a cost or differentiation advantages to outperform their rivals
4.2, Seek an industry segment where the five forces are less severe.
Niche market.
4.3, Try to change the five force (entry deterrence strategy, increase switching costs, vertical integration or try to reduce internal rivalry)
Coca-Cola Company in relationship to its Coca-Cola brand.
Threat of New Entrants/Potential Competitors: Median Pressure
Entry barriers are relatively low for beverage industry: there is almost 0 consumer switching cost and very low capital requirement. There are more and more new brands appearing in the market with usually lower price than Coke products
However Coca-Cola is seen not only as a beverage but also as a brand. It has a very significant market share for a long time and loyal customers are not very likely to try a new brand beverage.
Threat of Substitute Products: Median to high pressure\