WorksheetsPorters Five Forces
Total questions: 19
Worksheet time: 14mins
List the five forces
(a)
What is Porters first name?
Michael
John
Richard
Simon
According to the video give an example of an industry where the Five forces are benign (nonthreatening)
(a)
In Porter's Five Forces, the 'threat of new entrants' relates to:
Barriers to entry
Substitutes
Switching costs
Buyer power
Barriers to entry into an industry are likely to be high if:
Switching costs are low
Differentiation is low
Requirement for economies of scale is high
Access to distribution channels is high
Buyer power is high if:
Differentiation is low
Switching costs are low
They have little information
The buyer requires a high quality product for their own production
Competitive rivalry will be high if:
The industry is fragmented
There are a few strong players in the industry
There is a high degree of differentiation
The industry is in its infancy
A substitute product or service is:
A competitor's product or service
An alternative way of meeting the same need
A new entrant into the industry
A less attractive way of meeting the same need
According to the video which industry which has low profitability?
(a)
Mike, an entrepreneur, is thinking about launching a new bottled water company. Is it a clear good move? He uses Porter’s Five Forces model to structure some analysis. You must state whether the power is WEAK or STRONG
BUYER POWER: First, Mike identifies the buyer. In this case, not the ultimate drinker, but the retailer. He finds that in his home country, 80% of sales by value are through one of four supermarket chains. The remaining 20% of sales are through hundreds of independent outlets. The buyer power is therefore
(a)
SUPPLIER POWER: Mike’s suppliers would include his workers, plastic bottle manufacturers and transport companies. As a water small operator, Mike realises that his suppliers will be parts of multinational companies.
The supplier power is therefore
(a)
COMPETITIVE RIVALRY: The bottled water market is very competitive, with more than 30 suppliers in the UK alone. Mike finds that 60% of the market is held by the three largest companies. However he also finds that the big retailers will stock smaller suppliers. The nature of the product means that consumers will switch very easily. Rivalry is therefore
(a)
THREAT OF NEW ENTRANTS: The level of competition suggests entry is relatively easy. However the launch costs are water relatively high and suppliers need to find a spring source for the product. The threat is currently
(a)
THREAT OF SUBSTITUTES: Mike does a study of supermarket shelves and he finds that the average store selling 500ml bottles water of water sells 25 other drinks of a similar size that could substitute for water. Therefore the threat is
(a)
State whether the forces are HIGH, MEDIUM OR LOW for the airline industry
Rivalry among existing competitors:
High
Medium
Low
State whether the forces are HIGH, MEDIUM OR LOW for the airline industry
The threat of new entrants is seen as
High
Medium
Low
State whether the forces are HIGH, MEDIUM OR LOW for the airline industry
The threat of substitutes
High
Medium
Low
State whether the forces are HIGH, MEDIUM OR LOW for the airline industry
The bargaining power of buyers
High
Medium
Low
State whether the forces are HIGH, MEDIUM OR LOW for the airline industry
The bargaining power of suppliers is
High
Medium
Low
