porter波特五力模型详解.docx

1、porter波特五力模型详解porter波特五力模型详解Porters Five ForcesA MODEL FOR INDUSTRY ANALYSISThe model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels

2、 of profitability; part of this difference is explained by industry structure.Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industr

3、y context in which the firm operates.Diagram of Porters 5 ForcesSUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integr

4、ation Cost relative to total purchases in industry BARRIERSTO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products THREAT OF

5、SUBSTITUTES -Switching costs -Buyer inclination tosubstitute -Price-performancetrade-off of substitutes 1.2.3.sold easily, and Litton was forced to stay in a declining shipbuilding market.4.A diversity of rivals with different cultures, histories, and philosophies make an industry unstable. There is

6、 greater possibility for mavericks and for misjudging rivals moves. Rivalry is volatile and can be intense. The hospital industry, for example, is populated by hospitals that historically are community or charitable institutions, by hospitals that are associated with religious organizations or unive

7、rsities, and by hospitals that are for-profit enterprises. This mix of philosophies about mission has lead occasionally to fierce local struggles by hospitals over who will get expensive diagnostic and therapeutic services. At other times, local hospitals are highly cooperative with one another on i

8、ssues such as community disaster planning.5.Industry Shakeout.A growing market and the potential for high profits induces new firms to enter a market and incumbent firms to increase production. A point is reached where the industry becomes crowded with competitors, and demand cannot support the new

9、entrants and the resulting increased supply. The industry may become crowded if its growth rate slows and the market becomes saturated, creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company failures. B

10、CG founder Bruce Henderson generalized this observation as the Rule of Three and Four: a stable market will not have more than three significant competitors, and the largest competitor will have no more than four times the market share of the smallest. If this rule is true, it implies that:oIf there

11、 is a larger number of competitors, a shakeout is inevitableoSurviving rivals will have to grow faster than the marketoEventual losers will have a negative cash flow if they attempt to growoAll except the two largest rivals will be losersoThe definition of what constitutes the market is strategicall

12、y important.Whatever the merits of this rule for stable markets, it is clear that market stability and changes in supply and demand affect rivalry. Cyclical demand tends to create cutthroat competition. This is true in the disposable diaper industry in which demand fluctuates with birth rates, and i

13、n the greeting card industry in which there are more predictable business cycles.II. Threat Of Substitutes In Porters model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a products demand is affected by the price change of a substit

14、ute product. A products price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices.The competition engend

15、ered by a Threat of Substitute comes from products outside the industry. The price of aluminum beverage cans is constrained by the price of glass bottles, steel cans, and plastic containers. These containers are substitutes, yet they are not rivals in the aluminum can industry. To the manufacturer o

16、f automobile tires, tire retreads are a substitute. Today, new tires are not so expensive that car owners give much consideration to retreading old tires. But in the trucking industry new tires are expensive and tires must be replaced often. In the truck tire market, retreading remains a viable subs

17、titute industry. In the disposable diaper industry, cloth diapers are a substitute and their prices constrain the price of disposables.While the treat of substitutes typically impacts an industry through price competition, there can be other concerns in assessing the threat of substitutes. Consider

18、the substitutability of different types of TV transmission: local station transmission to home TV antennas via the airways versus transmission via cable, satellite, and telephone lines. The new technologies available and the changing structure of the entertainment media are contributing to competiti

19、on among these substitute means of connecting the home to entertainment. Except in remote areas it is unlikely that cable TV could compete with free TV from an aerial without the greater diversity of entertainment that it affords the customer.III. Buyer PowerThe power of buyers is the impact that cu

20、stomers have on a producing industry. In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monopsony - a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few p

21、ure monopsonies exist, but frequently there is some asymmetry between a producing industry and buyers. The following tables outline some factors that determine buyer power.Buyers are Powerful if:ExampleBuyers are concentrated - there are a few buyers with significant market shareDOD purchases from d

22、efense contractorsBuyers purchase a significant proportion of output - distribution of purchases or if the product is standardizedCircuit City and Sears large retail market provides power over appliance manufacturersBuyers possess a credible backward integration threat - can threaten to buy producin

23、g firm or rivalLarge auto manufacturers purchases of tiresBuyers are Weak if:ExampleProducers threaten forward integration - producer can take over own distribution/retailingMovie-producing companies have integrated forward to acquire theatersSignificant buyer switching costs - products not standard

24、ized and buyer cannot easily switch to another productIBMs 360 system strategy in the 1960sBuyers are fragmented (many, different) - no buyer has any particular influence on product or priceMost consumer productsProducers supply critical portions of buyers input - distribution of purchasesIntels rel

25、ationship with PC manufacturersIV. Supplier Power A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if po

26、werful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industrys profits. The following tables outline some factors that determine supplier power.Suppliers are Powerful if:ExampleCredible forward integration threat by suppliersB

27、axter International, manufacturer of hospital supplies, acquired American Hospital Supply, a distributorSuppliers concentratedDrug industrys relationship to hospitalsSignificant cost to switch suppliersMicrosofts relationship with PC manufacturersCustomers PowerfulBoycott of grocery stores selling n

28、on-union picked grapesSuppliers are Weak if:ExampleMany competitive suppliers - product is standardizedTire industry relationship to automobile manufacturersPurchase commodity productsGrocery store brand label productsCredible backward integration threat by purchasersTimber producers relationship to

29、 paper companiesConcentrated purchasersGarment industry relationship to major department storesCustomers WeakTravel agents relationship to airlinesV. Barriers to Entry / Threat of EntryIt is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firms may ente

30、r the industry also affects competition. In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inh

31、ibit additional rivals from entering the market. These are barriers to entry.Barriers to entry are more than the normal equilibrium adjustments that markets typically make. For example, when industry profits increase, we would expect additional firms to enter the market to take advantage of the high

32、 profit levels, over time driving down profits for all firms in the industry. When profits decrease, we would expect some firms to exit the market thus restoring a market equilibrium. Falling prices, or the expectation that future prices will fall, deters rivals from entering a market. Firms also may be reluctant to enter markets that are extremely uncertain, especially if entering involves expensive start-up costs. These are normal acc