Question

Analyze Porter's five forces that determine the intrinsic long-run attractiveness of a market or market segment?

1. Threat of substitute products or services.

2. Bargaining power of buyers

3. Bargaining power of suppliers

4. Threat of new Entrants

5. Rivalry among existing competitors

Answer 1

Porter's strategies has been designed to focus on analyzing why different industries are able to sustain different levels of profitability. These includes five strategies mentioned below

1) Threat of substitute products or services: This force is threatening for the producer because they know if substitute will be available in the market the customer will easly shift to other substitute and it will be the loss for the producer. Porter major concern is to protect them.

2) Bargaining Power of Buyer: In case market in buyer influencial which means if large number of buyers are there or few buyer are there then buyers are having the bargaining power in their hand and they demand high quality product at low price. Which will be the loss for the product.

3) Bargaining Power of Supplier : In case of few suppliers or Monopoly market , or when there are few substitute available in the market the supplier are having control over the market where they supply low quality product at high price.

4) Threats of new entrants For new entrants it's easy to enter in the market where everyone's making profit but it become difficult for producers in long term to survive because to much of new entry will cause a loss for other producer.

5) Rivalry amongst existing competitors When exit barriers are high or when industry growth is slow the competition to survive in the market are high and there will be though rivalary amongst the producer to sustain in the market.