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THE FIVE COMPETITIVE FORCES MODEL

 

(1)Entry Barriers(Very Attractive)

*High capital investments

*Short product life cycles

*R&D costs

*Proprietary products

*Industry standards

*Economies of scale

*Large distribution channels needed

*Some closed markets

(2)Buyers Power(Inclusive Attractiveness)

*Some backward integration

*Proprietary products mean low substitutes

*Buyers are not concentrated

*High percentage price/total purchase

(3)Suppliers Power(Very Attractive)

*Conventional materials used

*Suppliers not concentrated

*No threat of forward integration

(4)Substitutes(Unattractive)

*Long-term substitutes(redesigns)

*Some low customer loyalty

(5)Intensity of Rivalry and Competition(Very Unattractive)

*Cyclical sales

*High corporate stakes

*Differentiation becoming difficult

*Large vertically integrated competitors

*Favorable growth trends

 

CONCLUSION

The industry can be classified as attractive despite intense rivalry.

The changes taking place favor consolidation into larger firms,

Which have substantial resources necessary to commit expensive

R&D throughout the cycle of the industry.

CASES DIAGRAM