COMMODITY - Five Forces Analysis

COMMODITY - Five Forces Analysis

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Intensity of Existing Rivalry

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Exit barriers are low (COMMODITY) When exit barriers are low, weak firms are more likely to leave the market, which will increase the...
Low storage costs (COMMODITY) When storage costs are low, competitors have a lower risk of having to unload their inventory all at...
Large industry size (COMMODITY) Large industries allow multiple firms and produces to prosper without having to steal market share...
Relatively few competitors (COMMODITY) Few competitors mean fewer firms are competing for the same customers and resources, which is a...

Bargaining Power of Suppliers

Large number of substitute inputs (COMMODITY) When there are a large number of substitute inputs, suppliers have less bargaining leverage over...
High competition among suppliers (COMMODITY) High levels of competition among suppliers acts to reduce prices to producers. This is a positive...
Low concentration of suppliers (COMMODITY) A low concentration of suppliers means there are many suppliers with limited bargaining power. Low...
Low cost of switching suppliers (COMMODITY) The easier it is to switch suppliers, the less bargaining power they have. Low supplier switching...
Volume is critical to suppliers (COMMODITY) When suppliers are reliant on high volumes, they have less bargaining power, because a producer can...

Threat of Substitutes

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

Bargaining Power of Customers

Threat of New Competitors

High sunk costs limit competition (COMMODITY) High sunk costs make it difficult for a competitor to enter a new market, because they have to...
Industry requires economies of scale (COMMODITY) Economies of scale help producers to lower their cost by producing the next unit of output at lower...
Geographic factors limit competition (COMMODITY) If existing competitors have the best geographical locations, new competitors will have a...
High switching costs for customers (COMMODITY) High switching costs make it difficult for customers to change which products they normally...
High learning curve (COMMODITY) When the learning curve is high, new competitors must spend time and money studying the market...
Entry barriers are high (COMMODITY) 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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