2. the five- forces model.
- 3 steps in analyzing the five competitive forces:
\ step 1: identify the specific competitive pressures associated with each of the five forces.
\ step 2: evaluate the strength of each competitive force – fierce. Strong. Moderate to normal. Or weak?
\ step 3: determine whether the collective strength of the five competitive forces is conducive to earning attractive profits.
3. implications of the five competitive forces.
- competitive environment is unattractive from the standpoint of earning good profits when:
\ rivalry is vigorous.
\ entry barriers are low and entry is likely.
\ competition from substitutes is strong.
\ suppliers and customers have considerable bargaining power.
- competitive environment is ideal from a profit- making standpoint when:
\ rivalry is moderate.
\ entry barriers are high and no firm is likely to enter.
\ good substitutes do not exist.
\ suppliers and customers are in a weak bargaining position.