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THE FIVE COMPETITIVE FORCES MODEL

 

 

 

 

 

 

*High capital investment *Some backward integration

*Short product life cycle *Proprietary products mean low substitutes

*R &D costs *Buyers are not concentrated

*Proprietary products *High percentage price/total purchase

*Industry standards

*Economies of scale

*Large distribution channels needs

*Some closed markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Conventional materials used *Long-term substitutes (redesigns)

*Suppliers not concentrated *Some low customer loyalty

*No threat of forward integration

 

CONCLUSION

The industry can be classified as attractive despite intense rivalry. The changes taking place

favor consolidation into large firms, which have substantial resources necessary to commit

expansive R&D throughout the cycles of the industry.