Case 26: PROCTER & GAMBLE

Crafting A Business

PORTER’S Industry Ana

Bargaining Power

Suppliers are POWER − There is a credibl

suppliers. − Suppliers are con − There is a signifi − The customers ar

What does the bargai

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FIVE FORCES WORKSHEET lysis Model

of Suppliers

FUL if… e forward integration threat by

centrated. cant cost to switch suppliers. e powerful.

Suppliers are WEAK if… − The product is standardized. There are many

competitive suppliers. − They are supplying commodity products. − There is a credible backward integration threat by

purchasers. − There are concentrated purchasers. − The customers are weak.

ning power of suppliers in your industry look like?

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Crafting A Business Plan

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Threat of New Entrants

Threat of new entrants is LOW if… − There is patented or proprietary know-how. − There is difficulty in brand switching. − There are restricted distribution channels. − There is a high scale threshold.

Threat of new entrants is HIGH if… − There is common technology. − There is little brand franchise. − Distribution channels are easily accessible. − There is a low scale threshold.

What does the threat of new entrants within your industry look like?

Competitive Rivalry Within Industry

Competitive rivalry within an industry is LOW if… − There are few players in the industry. − Players have different strategies. − Differentiation between competitors and their

products are high. − There is little to no price competition − There are high market growth rates. − Barriers for exit are low.

Competitive rivalry within an industry is HIGH if… − There are many players of about the same size. − Players have similar strategies. − There is not much differentiation between players

and their products. − There is much price competition − Low market growth rates (growth of a particular

company is possible only at the expense of a competitor).

− Barriers for exit are high (e.g. expensive and highly specialized equipment).

What does the bargaining power of customers in your industry look like?

Crafting A Business Plan

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Threat of Substitutes

Threat of substitutes will be LOW if… − There is strong brand loyalty. − There are tight or strong customer relationships. − Switching costs for customers are high. − The relative price compard to performance of

substitutes is high.

Threat of substitutes will be HIGH if… − There is little to no brand loyalty. − There are loose customer relationships. − Switching costs for customers are low. − The relative price compard to performance of

substitutes is low.

What does the bargaining threat of substitutes within your industry look like?

Bargaining Power of Customers

Customers are POWERFUL if… − There are a few buyers with significant market

share. − Buyers purchase a significant proportion of the

output. − Buyers possess a credible backward integration

threat.

Customers are WEAK if… − Producers can threaten forward integration, taking

over customers’ position. − There are significant buyer switching costs. − There are many customers – significant influence

on a particular product or price is small. − Producers supply critical portions of the

customers’ input.

What does the competitive rivalry within your industry look like?