Porter’s Five Force Framework
Threat of new entrants

Bargaining power of suppliers

Competitive rivalry

Bargaining power of Buyers

Threat of substitutes

(1)Market Structure No. of players. Demand / Supply Market Share
(2)Market Conduct (actions) Strategies Reactive/ Proactive (3)Market Performance (financial)

Intra industry competition
All the components of five force model have impact on these three levels of intra-industry competition

Entrants
1. Economies of scale e.g, benefits associated to the bulk purchasing. 2. The high or low cost of entry, cost of latest technology

3. Ease of access to distribution channel
(Ex: Sony faced in India from BPL, Videocon; Case of Castrol and Toyota )

4. Cost advantages not always related to the size of company e.g. personal contacts or knowledge that larger companies do not know (Learning curve effects)
5. Will competitors retaliate? 6. Govt. action. 7. How important is differentiation?

Entry barriers
 Govt.

policy related (Coke, FDI in Retail )

 Technology related (Steel, Thermal, Aluminium) Marketing related ( Distribution, Contacts, Differentiation )

Ex: Control, Sony could overcome the entry barrier

The product categories and the entry barriers ( Cigarette as a Product category and its marketing and technology related entry barriers)

Threat of Substitutes
This is High where: • There is Product to Product Substitution

The Power of Buyers
•This is low where these are few, large players in markets. • If these are a large no. of undifferentiated , small players, then buyer’s power is high • The costs of switching between brands is low.

Objective of a Marketer can be to reduce the bargaining power of buyers.

Power of Suppliers
Power of Suppliers is High when :

• There are Fewer suppliers. (Ex- Pharma Formulators)
• Switching cost is high. • There is a possibility of supplier integrating forward. (Ex: Nirma) •Location allows suppliers to sell to any company (Tata motors depending on SSI of Adityapur) •Parent company support is there. ( RIL)