Source

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Porter five forces model
Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. With a little adap
the balance of power in more general situations.

It works by looking at the strength of five important forces that affect competition:

Supplier Power: The power of suppliers to drive up the prices of your inputs.
Buyer Power: The power of your customers to drive down your prices.
Competitive Rivalry: The strength of competition in the industry.
The Threat of Substitution: The extent to which different products and services can be used in place of your own.
The Threat of New Entry: The ease with which new competitors can enter the market if they see that you are making good

By thinking about how each force affects you, and by identifying the strength and direction of each force, you can quickly a
ability to make a sustained profit in the industry.

How to use this spreadsheet

For each of the factors below, you should enter one of the following values -1,0 or 1. For each parameter it is defined which

You can enter your values in the light-grey cells

Threats of new entry

Time and cost of entry
Specialist knowledge
Economies of scale*
Cost advantages
Technology protection
Barriers to entry

Competitive rivalry
Number of competitors
Quality differences
Other differences
Switching costs
Customer loyalty

Supplier power
Number of suppliers
Size of suppliers
Uniqueness of service
Your ability to substitute
Cost of changing
Threat of substitution
Substitute performance
Cost of change

Buyer power
Number of customers
Size of each order
Difference between competitors
Price sensitivity
Ability to substitute
Cost of changing

Economies of scale is the cost advantage that arises with increased output of a product.

TOTAL=
a little adaptation, it is also useful as a way of assessing

n.
aking good profits (and then drive your prices down).

n quickly assess the strength of your position and your

fined which defines high or low.

in
lts
su

-1 0 1
Re

High Neutral Low Neutral Time and cost of entry

Much Neutral Little Neutral Specialist knowledge
High Neutral Low Neutral Economies of scale*
Many Neutral Few Neutral Cost advantages
Much Neutral Little Neutral Technology protection
Many Neutral Few Neutral Barriers to entry
0 0 0

Many Neutral Few Neutral Number of competitors

Big Neutral Small Neutral Quality differences
Many Neutral Few Neutral Other differences
High Neutral Low Neutral Switching costs
High Neutral Low Neutral Customer loyalty
0 0 0

Few Neutral Many Neutral Number of suppliers

Big Neutral Small Neutral Size of suppliers
Very Neutral Not very Neutral Uniqueness of service
Good Neutral Bad Neutral Your ability to substitute
High Neutral Low Neutral Cost of changing
 0 0 0

Good Neutral Bad Neutral Substitute performance

High Neutral Low Neutral Cost of change
0 0 0

Many Neutral Few Neutral Number of customers

Big Neutral Small Neutral Size of each order
Big Neutral Small Neutral Difference between competitors
High Neutral Low Neutral Price sensitivity
Good Neutral Bad Neutral Ability to substitute
High Neutral Low Neutral Cost of changing
0 0 0

0 0
 Threats of new entry

- Neutral Time and cost of entry

- Neutral Specialist knowledge
- Neutral Economies of scale*

Threat of new entry

- Neutral Cost advantages
- Neutral Technology protection
- Neutral Barriers to entry

Competitive Rivalry

Supplier power 0 0 0 B

Supplier power
Threat of Substitution

- Neutral Number of suppliers 0

- Neutral Size of suppliers
- Neutral Uniqueness of service Neutral Difference betwe
- Neutral Your ability to substitute
- Neutral Cost of changing

Threat of substitution

- Neutral Substitute performance

- Neutral Cost of change
 Competitive rivalry

Neutral Number of competitors -

Neutral Quality differences -
Neutral Other differences -
Neutral Switching costs -
Neutral Customer loyalty -

Buyer power

Buyer power

Neutral Number of customers -

Neutral Size of each order -
Neutral Difference between competitors -
Neutral Price sensitivity -
Neutral Ability to substitute -
Neutral Cost of changing -
Index number 009

This worksheet was created by Willem Klok Links:

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