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As porter’s five forces analysis deals with factor outside an industry that influence the
nature of competition with it, the five forces inside the industry (micro environment)
that influence the way in which firms complete and the industry’s likely profitability
is conducted in poter’s five force model.
The original competitor forces model as proposed by poter identified five forces
which would impact on an organisation’s behaviour in a competitive market. There
include the following:
1. The rivalry between existing sellers in the market.
2. The power exerted by the customers in the market.
3. The impact of the suppliers on the sellers.
4. The potential threat of new seller entering the market.
1. The threat of substitute products becoming available in the market
The industry of rivalry which is most obvious of the five forces in an industry will be
dissipated through head-to- head competition.
Buyer power
Buyer power is one of the two horizontal forces influence the appropriation of the
value created by an industry (here the airline industry). The most important
determinants of buyer power are the size and the concentration of customers. Other
factors are the extent to which the buyers are informed and the concentration or
differentiation of the competitors.
• This force is relatively high where there a few large players in the market.
• Low cost of switching between suppliers such as from one fleet supplier of
truck to another.ggg