Porter's Five Forces

Forces that Shape Competition

Rivalry Among Existing Competitors

DEGREE OF RIVALRY
  • Exit Barriers-Is there a high cost to exit the market and go into a different one?
  • Industry Concentration-This is the percent of market share held by the four largest firms in that industry based on N.A.I.C.S. codes. Click here to find the latest concentrations based on the Economic Census. Statistics for the largest 8, 25 and 50 firms are also available.
  • Fixed costs/Value Added
  • Industry growth
  • Intermitent overcapacity
  • Product differences
  • Switching costs
  • Brand identity
  • Diversity of rivals
  • Corporate stakes
Sources which may help with information about rivalry and general industry background are as follows:
  • Standard & Poor's Industry Surveys REF HC106.6 S74 Great starting point for analyzing industries. Information on market share, size of industry, regulation, trends, etc.
  • Business Insights: Essentials Search under Industries or Advanced Search for information and market share for a wide variety of industries. Searchable by NAICS codes.
  • ABI/INFORM Collection
    Search all three ABI/Inform databases together here or search one at a time below. ABI/INFORM Complete provides current and historic abstracts and many full-text articles from over 2,800 business and management journals, including hundreds of titles from outside the U.S. The database covers finance, management, marketing, operations, accounting, business conditions, sports and business, entertainment, and case studies.
  • Business Source Premier (Original Interface) Search by Subject or NAICS codes. You can limit to Industry Overview or SWOT Analysis for select companies.
  • Statista
    A statistics portal that provides data on over 80,000 topics from more than 10,000 different sources.  The content is purely aggregated statistics, geared towards business and marketing statistical needs, with a focus on current awareness.  Easy-to-use infographics and tables are available for download as images to insert into presentations.

Threat of New Entrants

BARRIERS to ENTRY
  • Absolute cost advantages
  • Propietary learning curve
  • Access to inputs
  • Government policy-government may allow monopolies (utility companies) but heavily regulates the industry.
  • Economies of scale
  • Capital requirements
  • Brand Identity
  • Switching costs
  • Access to distribution networks
  • Expect retaliation
  • Proprietary products (patents, trademarks, copyright, etc.).

Sources which may be useful:
 
  • freepatentsonline
    The database contains all patents published by the United States Patent and Trademark Office (USPTO) since number 4,000,000. New patents are published by the USPTO every Tuesday, and are automatically added to the database. Images may be viewed from the patent text pages in either the AlternaTIFF or PDF formats. Covers 1976 (December 28) to the present.
  • United States Patent and Trademark Office
    Includes a search function for US patents.
  • LexisNexis Academic .Search under Get Company Info, Company Name or Ticker. There is a tab labelled: Intellectual Property. Search under this for a list of patents/trademarks.
  • eCFR-Electronic Code of Federal Regulations
    The Electronic Code of Federal Regulations (e-CFR) is a currently updated version of the Code of Federal Regulations (CFR). It is not an official legal edition of the CFR. The e-CFR is an editorial compilation of CFR material and Federal Register amendments produced by the National Archives and Records Administration's Office of the Federal Register (OFR) and the Government Printing Office. The OFR updates the material in the e-CFR on a daily basis. The current update status appears at the top of all e-CFR web pages

Bargining Power of Suppliers

SUPPLIER POWER
  • Supplier concentration
  • Importance of volume to supplier
  • Differentiation of inputs
  • Impact of inputs on cost or differentiation
  • Switch costs of firms in the industry
  • Presence of substitute inputs
  • Treat of forward integration
  • Cost relaive to total purchases in industry

Threat of Substitute Products or Services

THREAT OF SUBSTITUES
 
  • Switching costs
  • Buyer inclination to substitute
  • Price-performance trade-off of substitutes

Bargaining Power of Buyers

BUYING POWER
  • Bargaining leverage
  • Buyer volume
  • Buyer information
  • Brand identity
  • Price sensitivity
  • Threat of backward integration
  • Product differentiation
  • Buyer concentration vs. industry
  • Substitutes available
  • Buyers incentives

More Information on Porter's Five Forces

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