MajorForcesDeterminingIndustryCompetitionThis subjectisa partofindustryanalysis,butbecause of its importance it is discussed indetailhere.There are five interactive competitiveforces that collectively determine an industry'slong-term attractiveness---presentcompetitors,potential competitors,the bargaining power ofsuppliers and buyers,andsubstitute products(seeFigure 1).This mix of forces explains whysomeindustriesare consistently more profitablethan others and providesfurther insights intowhich resources are required and whichstrategies should be adopted to be successful
Major Forces Determining Industry Competition ◼ This subject is a part of industry analysis, but because of its importance it is discussed in detail here. There are five interactive competitive forces that collectively determine an industry’s long-term attractiveness-present competitors, potential competitors, the bargaining power of suppliers and buyers, and substitute products (see Figure 1). This mix of forces explains why some industries are consistently more profitable than others and provides further insights into which resources are required and which strategies should be adopted to be successful
Forces In Tho Indusry AnalysisNewEntrantsThreat.ofNew EntrantsBargainingPower orIndustrySuppliersCompetitorsSuppliersBuyersCurrent RivalryBargainingPower orThreat ofBuyersSubstitutesSubstitutes
Current Rivalry Industry Competitors Forces In The Indusry Analysis Suppliers New Entrants Buyers Substitutes Threat of New Entrants Threat of Substitutes Bargaining Power or Buyers Bargaining Power or Suppliers
The strength of the individual forces varies fromindustryto industry and,overtime,withinthesame industry.In the cellular phone industry,thekey forces are present competitors and threat ofnew entrants.While in the fast-foodindustry thekey forcesare the present competitors (forexample,Wendy'sversusBurgerKingversusMcDonald's),substituteproducts(neighborhooddelis,saladbars,all-you-can-eatbuffetrestaurants,and frozenmeals,andbuyers whoare concerned about health and nutrition and whosee fast foods as a symbol of a throw-away society
◼ The strength of the individual forces varies from industry to industry and, over time, within the same industry. In the cellular phone industry, the key forces are present competitors and threat of new entrants. While in the fast-food industry the key forces are the present competitors (for example, Wendy’s versus Burger King versus McDonald’s), substitute products (neighborhood delis, salad bars, all-you-can-eat buffet restaurants, and frozen meals), and buyers who are concerned about health and nutrition and who see fast foods as a symbol of a throw-away society