NDIVIDUAL GRADED PAPER

FIVE FORCES

THAT DETERMINE MARKET ATTRACTIVENESS

The competitive threats posed by these five forces are:

1. Threat of intense segment rivalry:

A segment is unattractive if it already contains numerous, strong, or aggressive competitors.

2. Threat of new entrants:

A segment’s attractiveness varies with the height of its entry and exit barriers.

The most attractive segment has high entry barriers and low exit barriers, so few new firms can enter, while poor-performing firms can exit easily.

3. Threat of substitute products:

A segment is unattractive when there are actual or potential substitutes for the product.

4. Threat of buyer’ growing bargaining

power:

A segment is unattractive if the buyers possess strong or growing bargaining power

5. Threat of suppliers’ growing bargaining

power:

A segment is unattractive if the company’s suppliers are able to raise prices or

reduce quantity supplied.

- Michael Porter -