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Presented By:
Rahul Wasnik
Mohit Khushlani
Swapnil R Bhosle
Jay Auoti
Aditya Shihorkar
Michael E. Porter
Born in 1947.
Professor of Harvard Business
School.
Introduced Porter's 5 Forces Model.
Written 18 books & over 125
Articles.
Threats of Substitutes
Threats of Substitute in the Porters theory actually means
goods and services that does similar functions
How many close substitutes are available?
How pricy are the substitutes?
What is the perceived quality of the substitutes?
Competitive Rivalry
1.
2.
3.
4.
5.
6.
How many companies are there for the buyer to choose from?
Are the buyers buying a huge volume?
Do you depend only on a few buyers to sustain your sales?
How hard is it for the buyers to switch and use a competing
product?
Are the buyers purchasing from you as well as your competitors?
Do the buyers have the capacity to enter your business and
produce the goods themselves?
EXAMPLES
Suppliers Power
Under Armour
Bargaining power
of suppliers
Threat of new
entrants
Large capital costs
are required for
branding,
advertising and
creating product
demand, and hence
this limits the entry
of newer players in
the sports apparel
market.
Competitive
rivalry
Bargaining power of
customers
Wholesale customers, like
Dick's Sporting Goods and
the Sports Authority, hold
a certain degree of
bargaining leverage, as
they could substitute
Under Armour's products
with other competitors' to
gain higher margins.
In 2012, Under
Armour's products
were produced by
27 manufacturers
located across 14
countries. Of these,
the top 10
Bargaining power of end
Under Armour
accounted for 49
faces intense
customers is lower as
percent of the
competition from
Under Armour enjoys
products
Nike, Adidas and
strong brand recognition.
Threat of substitute
manufactured.
newerproducts
players.
The demand for performance apparel, sports footwear
and accessories is expected to continue, and hence we
think this force does not threaten Under Armour in
theforeseeablefuture.
New Entrants
Measures the ability of companies
to enter your market
Customers
This measures the factors effecting how easy it is for
buyers to drive prices down
Substitutes
Suppliers
This assesses how easy it is for suppliers
to drive up prices.
Maincost
Higher
Require
Supply
Suppliers
Low
raw
the
of
consultants
of
have
material
highly-skilled
number
switching
highof
ofof
bargaining
TCS
consulting
suppliers.
high
consultants
isexcellence
their
power.
agencies
employees
falls
to below
maintain
= the
or higher
consultants.
market
theirthe
demand.
reputation
suppliersfor
powe
qua
Competition
This measures the number and capacity of your
competitors. If your company has high competitive
advantage then you will have high rivalry power.
Competitive
Conclusion
The Porter's Five Forces tool is a simple but
powerful tool for understanding where power
lies in a business situation. This is useful,
because it helps you understand both the
strength of your current competitive position,
and the strength of a position you're considering
moving into.
THANK YOU