Sikandar Market Assigment 6

NAME: SIKANDAR AKRAM
ROLL NO: 22
FACULTY: BS (BBA)
SECTION: B
TEACHER: SIR FAWAD ALAM
Michal Porter’s Five Forces Model

In any company five competitive forces dictate the rules of competition. Together, these five forces determine industry
attractiveness and profitability.
In porter’s model, the five forces that shape industry competition are.
1. Current Rivalry
2. Threat of new entrants
3. Threat of substitutes
4. Bargaining power of buyers
5. Bargaining power of supplier.
1) Current Rivalry:
Rivalry means competition=this effect to choose strategy
This force examines how intense the competition is in the market place. It consider the number of existing
competitors and what each on can do. Rivalry competition is high when there are just a few business selling a
product or service.
2) Threat Of New Entrants:

Entry Easy = Competition High
Entry Difficult = Competition Low
This force consider how easy or difficult it is for competitors to join the marketplace .The easier it is for a new
competitor to gain entry. The greater the risk is of an established business market share being depleted.
3) The Threat Of Substitute Products Or Services:

The threat of substitutes is the availability of other products that a customer could purchase from outside an industry.
The competitive structure of an industry is threatened when there are substitute products available that offer a
reasonably close benefits match at a competitive price. In this case, price points are limited by the prices at which
substitutes are available, thereby limiting the amount of profitability that can be generated within an industry.
4) Bargaining Power of Buyer :
High bargaining power of buyers means that it is easy for buyers to drive down the price of your product. The
bargaining power of buyers is determined by the number of buyers in your market. Write down how many buyers
there are in your market. Also describe if you depend on your buyers or if they depend on you.
If shift cost low = less competition
If shift cost low = more competition

5) Bargaining Power of Supplier:
High bargaining power of suppliers will result in a higher price for resources for your product. The
bargaining power of suppliers is determined by the number of suppliers in the market. Write down
on which suppliers you depend for your resources and how many other suppliers could offer the
same resources. Also describe if it is easy to switch suppliers.
 The bargaining power is high if there are few or just one supplier. That supplier has large
bargaining power and the power to determine its price.
 The bargaining power is low if there are many suppliers on the market. An individual
supplier has little bargaining power, and no influence on the price.
Honda Porter’s Five Forces Analysis

This section analyses Honda using each of the five forces of Porter’s model.
 The economies of scale is fairly difficult to achieve in the industry in which Honda operates.
This makes it easier for those producing large capacitates to have a cost advantage. It also
makes production costlier for new entrants. This makes the threats of new entrants a
weaker force.
 The number of suppliers in the industry in which Honda operates is a lot compared to the
buyers. This means that the suppliers have less control over prices and this makes the
bargaining power of suppliers a weak force.
 The number of suppliers in the industry in which Honda operates is a lot more than the
number of firms producing the products. This means that the buyers have a few firms to
choose from, and therefore, do not have much control over prices. This makes the
bargaining power of buyers a weaker force within the industry.
 There are very few substitutes available for the products that are produced in the industry in
which Honda operates. The very few substitutes that are available are also produced by low
profit earning industries. This means that there is no ceiling on the maximum profit that
firms can earn in the industry in which Honda operates. All of these factors make the threat
of substitute products a weaker force within the industry.
 The number of competitors in the industry in which Honda operates are very few. Most of
these are also large in size. This means that firms in the industry will not make moves
without being unnoticed. This makes the rivalry among existing firms a weaker force within
the industry.

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NAME: SIKANDAR AKRAM

TEACHER: SIR FAWAD ALAM

Michal Porter’s Five Forces Model

2) Threat Of New Entrants:

3) The Threat Of Substitute Products Or Services:

4) Bargaining Power of Buyer :

If shift cost low = less competition

If shift cost low = more competition

Honda Porter’s Five Forces Analysis

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