Industry Analysis
• Identification of industry’s profit potential
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Five Forces Model
Threat of entry.
Power of suppliers
Power of buyers.
Threat of substitutes.
Rivalry among existing competitors
Threat of Entry
• Economies of Scale
• Network Effects
• Customer Switching Costs
• Capital Requirements
• Advantages Independent of Size
• Government Policy
Power of Suppliers ( Low)
• M-Link
• Ring
• Backward Integration
• Suppliers owned by Parent Company
Power of buyers (High)
• Low Switching Cost
• Standardized or Undifferentiated Product
• Threat of Substitutes (High)
• Substitute offers an attractive price-performance trade-off
• The buyer’s cost of switching to the substitute is low
Rivalry among existing competitors (High)
• Competitive industry structure
The number and size of its competitors.
 The firms’ degree of pricing power.
 The type of product or service.
 The height of entry barriers
• Industry growth.
• Strategic commitments.
• Exit barriers.