Capstone Project

Sheet1

					FIVE FORCES INDICATOR SHEET
		Strong forces suggest Key Success Factors…...								If the indicator is an underlying reason for a STRONG force,
										to be successful in this industry, producers must….. (examples)
	THREAT OF NEW ENTRANTS
	1	Can new entrants compete effectively without having to build scale?								drive costs/prices down via economies of scale; drive up the costs to compete
	2	Have buyers shown a low level of loyalty to existing producers?								increase customer loyalty
	3	Are the costs of entering and competing relatively low?								drive up the costs of competing (marketing scale/scope for example)
	4	Can new entrants easily get distribution and access to buyers?								work to lock up available distribution channels
	5	Would buyers have low/no costs to switch to new entrants?								create switching costs
	6	Does the industry seem to be growing and attractive to new entrants?								…can't do anything about this
	THREAT OF SUBSTITUTES
	7	Are substitutes readily available and affordable?								…can't do anything about this
	8	Do substitutes offer a similar or superior cost/benefit solution?								deliver a superior value/benefit versus substitutes - differentiate
	9	Can buyers easily switch to and learn to use substitutes?								create switching costs
	10	Have buyers shown a willingness to switch to substitutes?								create switching costs / improve differentiation
	BARGAINING POWER OF BUYERS
	11	Can buyers easily switch between producers?								create switching costs
	12	Have buyers shown a low level of loyalty to individual producers?								increase customer loyalty
	13	Are there only a few large-volume buyers?								work to lock in buyers for long period of time; create volume/scale savings
	14	Are purchases relatively large, infrequent, and important?								reduce perception of a large purchase…make it seem smaller (e.g. spread out)
	15	Are producers' goods pretty much the same (i.e. commodity-like)?								differentiate
	BARGAINING POWER OF SUPPLIERS
	16	Are most suppliers' goods unique and differentiated?								differentiate
	17	Is it difficult or costly for producers to switch suppliers?								negotiate for long-term deals to avoid frequent negotiations
	18	Are there a limited number of suppliers or is supply limited?								enable ability to use broader range; lock in key suppliers long term
	19	Does the supply account for a major portion of producer costs?								reduce dependency on key inputs as much as possible
	RIVALRY AMONG PRODUCERS
	20	Are there many rivals of about the same size and power?								…can't do anything about this
	21	Is the industry declining or experiencing slow growth?								…can't do anything about this
	22	Is it easy for buyers to switch between producers?								create switching costs
	23	Have buyers shown a low level of loyalty to individual producers?								improve customer loyalty
	24	Is it difficult for producers to adjust production if demand changes?								innovate for flexible business model/operations
	25	Are producers' goods pretty much the same (i.e. commodity-like)?								differentiate
		NOTE: KSFs do NOT specify HOW exactly producers should act against the force, they only describe an
		outcome or objective they must pursue. For example, there are many ways to differentiate or to create switching costs.