2.3 page 90
Gavin: yes, exactly. You need to look at the five different forces and assess how significant each of them is for us.
Jessica: and what are the forces again? Something about ‘bargaining power’?
Gavin: Ha-ha. Yes, that’s almost it. The five forces are the bargaining power of buyers
Jessica: oh, yeah. That’s right.
Gavin: and then you’ve got ht bargaining power of suppliers
Jessica: Ah, yes, yes. That’s right, and there’re two kinds of threat, aren’t there? Just a sec.
Gavin: Yep, that’s right, but you’ve also got competitive rivalry, remember, and then the first threat is with new entrants and the other one is substitute products of services.
Jessica: OK, yeah, I’ve got the list up here on Wikipedia. OK, yes, that’s it. I remember now. So for the bargaining power of buyers, we’d look at how easy it would be for our customers to reduce how much they pay for our product, right? How much pressure they can exert.
Gavin: exactly. And for suppliers it’s very similar: how easy is it for them to increase their prices?
Jessica: OK. That seems fairly straightforward. Competitive rivalry would be about how many competitors we currently shave of how many we might have in the future?
Gavin: the competitive rivalry section is about how many existing competitors we have and how influential they are you were also talking about the threat of new entrants – so, how easy it is for new competitors to enter the market.
Jessica: right, yes, of course.
Gavin: and that just leaves the threat of substitute products or services, which is quite straightforward.
Jessica: yeah, sure, we’d look at whether there are alternative products which customers could use to fulfill their needs.
Gavin: exactly. So could you have a look at that this week?
Jessica: Sure. I’ll start putting some notes together tomorrow..