Porter’s Five Forces Model (Competitive Forces)
                         Threat of New Entrants
    Bargaining Power of the   Inter-Firm     Bargaining Power of the 
          Suppliers            Rivalry              Buyers
                            Threat of Substitutes
                                   
    Porters Five Forces      Areas of Microeconomics
    Bargaining Power of      Supply and demand theory, cost and 
    Suppliers                production theory, price elasticity
    Bargaining Power of      Supply and demand theory, customer 
    Buyers                   behavior, price elasticity 
    Inter-Firm Rivalry       Market structures, number of players, 
                             market size and growth rates
    Threat of Substitutes    Substitution effects
    Threat of New            Market entry barriers
    Entrants
     Industry                Profitability, supernormal profits
    attractiveness
                                       
                      What is it?
          What is it trying to communicate?
      How can it be used by strategic managers?
                            
            Porter’s Five Forces Model (Competitive Forces)
   Who are the Buyers?
   Factors impacting the bargaining power of the buyers:
   Standardized industry product             Bargaining Power of the 
   Purchases are made in large volume               Buyers
   Number of buyers is small
   Significant threat of backward integration
   Switching costs are low                   Strong?  Medium?  Weak?
   Buyers are well-informed about the seller’s costs
                                   
                Porter’s Five Forces Model (Competitive Forces)
                                   Factors impacting the bargaining power of the suppliers:
                                       Product represents a significant % of purchaser’s final
     Bargaining Power of the           product
             Suppliers                 Few suppliers
                                       Unique product or input
                                       Significant threat of forward integration
     Strong?  Medium?  Weak?           Supplied product is less expensive for the 
                                       purchaser to buy than make