4. PORTER' FIVE FORCES,

BARRIES TO ENTRY: 

1. supply-side economies of scale (new entry come in with either large scale or cost disadvantage)

2. demand-side benefits of scale (discourage customers to buy from newcomer)

3. customer switching cost

4.capital requirements

5. incumbency advantages independent of size

6. unequal access to distribution channels

7. restrictive goverment policy

8. expected retaliation

POWER OF SUPPLIERS

A SUPPLIER IS POWERFUL IF

1. it's more concentrated than the industry it sells to

2. the supplier group does not depend heavily on the industry for its revenue

3. industry participants face switching costs in changing suppliers

4. suppliers offer products that are differentiated

5. there is no substiture for what the supplier group provides

6. the supplier group can credibly threaten to integrate forward into the industry

THE POWER OF BUYERS:

1. there are few buyers, or each one purchases in volumes that are large relative to the size of a single vendor

2. the industry's products are standardized or undifferentiated

3. buyers face few switching costs in changing vendors

4. buyers can credibly threaten to integrate backward and produce the industry's product themselves if vendors are too profitable

BUYER GROUP IS PRICE SENSITIVE IF:

1. buyer group earns low profits, is strapped for cash, or is otherwise under pressure to trim its purchasing costs

2. products purchases from industry represents a significant fraction of its cost structure or procurement budget

3. the quality of buyer's products or services is little affected by the industry's product

4. the industry's product has little effect on the buyer's other costs

THREAT OF SUBSTITUTES

1. it offeres an attractive price-performance trade-off to the industry's product

2. the buyer's cost of switching to the substitute is low

RIVALRY AMONG ECISTING COMPETITORS

INTENSITY OF RIVALRY IS GREATEST IF:

1. competitors are numerous or are roughly equal in size and power

2. industry growth is slow

3. exit barriers are high

4. rivals are highly committed to the business and have aspirations for leadership, especially if they have goals that go beyond economic performance in the particular industry

5. firms cannot read each other's signals well because of  lack of  familiarity with one another, diverse approaches to competing, or differing goals

FACTORS, NOT FORCES

1. industry growth rate

2. technology and innovation

3. government

4. complementary products and services

IMPLICATION OF STRATEGY:

1. POSITIONING THE COMPANY (where the forces are weakest)

2. EXPLOITING INDUSTRY CHANGE

3. SHAPING INDUSTRY STRUCTURE 

---redividing profitability in favor of incumbents

---expanding the overall profit pool