Ap - Five Forces Analysis

Ap - Five Forces Analysis

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Intensity of Existing Rivalry

Large industry size (Ap) Large industries allow multiple firms and produces to prosper without having to steal market share...
Relatively few competitors (Ap) Few competitors mean fewer firms are competing for the same customers and resources, which is a...

Bargaining Power of Suppliers

High competition among suppliers (Ap) High levels of competition among suppliers acts to reduce prices to producers. This is a positive...
Volume is critical to suppliers (Ap) When suppliers are reliant on high volumes, they have less bargaining power, because a producer can...

Threat of Substitutes

Substitute product is inferior (Ap) An inferior product means a customer is less likely to switch from Ap to another product or service.
Substantial product differentiation (Ap) When products and services are very different, customers are less likely to find comparable product...
High cost of switching to substitutes (Ap) Limited number of substitutes means that customers cannot easily switch to other products or...
Limited number of substitutes (Ap) A limited number of substitutes mean that customers cannot easily find other products or services...

Bargaining Power of Customers

Product is important to customer (Ap) When customers cherish particular products they end up paying more for that one product. This...
Large number of customers (Ap) When there are large numbers of customers, no one customer tends to have bargaining leverage....
Limited buyer choice (Ap) When customers have limited choices they end up paying more for the choices that are available....

Threat of New Competitors

Strong distribution network required (Ap) Weak distribution networks mean goods are more expensive to move around and some goods don’t get to...
High capital requirements (Ap) High capital requirements mean a company must spend a lot of money in order to compete in the...
High sunk costs limit competition (Ap) High sunk costs make it difficult for a competitor to enter a new market, because they have to...
Strong brand names are important (Ap) If strong brands are critical to compete, then new competitors will have to improve their brand...
Advanced technologies are required (Ap) Advanced technologies make it difficult for new competitors to enter the market because they have to...
Industry requires economies of scale (Ap) Economies of scale help producers to lower their cost by producing the next unit of output at lower...
Patents limit new competition (Ap) Patents that cover vital technologies make it difficult for new competitors, because the best...
Customers are loyal to existing brands (Ap) It takes time and money to build a brand. When companies need to spend resources building a brand,...
High switching costs for customers (Ap) High switching costs make it difficult for customers to change which products they normally...
High learning curve (Ap) When the learning curve is high, new competitors must spend time and money studying the market...
Entry barriers are high (Ap) When barriers are high, it is more difficult for new competitors to enter the market. High entry...

What is Porter's Five Forces Analysis?

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