Chapter 5 Industry, Market & Competitive Feasibility Analysis:

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Presentation transcript:

Chapter 5 Industry, Market & Competitive Feasibility Analysis: Evaluating Industry Attractiveness via Porter’s Five Forces Model: How to Reach a Conclusion Diane M. Sullivan, Ph.D., 2010 Sections modified from Hitt, Ireland, and Hoskisson, Copyright © 2008 Cengage

Porter’s Five Forces: Overall Analysis Based on your analysis, rate each force from -5 (really bad, poor profit potential to +5 (great, excellent profit potential) Five Forces Overall Analysis Intensity of Rivalry Rating: Power of Suppliers Rating: Power of Buyers Rating: Threat of New Entrants Rating: Threat of Substitutes Rating: Sum of Ratings: Scores between +10 to +25  Generally Attractive and High Profit Potential Scores between -6 to +9  Generally Moderately Attractive and Moderate Profit Potential Scores less than -6  Generally Unattractive and Low Profit Potential

Porter’s Five Forces: Overall Analysis Example Based on your analysis, rate each force from -5 (really bad, poor profit potential to +5 (great, excellent profit potential) Five Forces Overall Analysis Intensity of Rivalry Rating: -4 to -5 Power of Suppliers Rating: -3 to -5 Power of Buyers Rating: -1 to -3 Threat of New Entrants Rating: 0 to -2 Threat of Substitutes Rating: +1 to -3 Sum of Ratings: -7 to -18 Scores between +10 to +25  Generally Attractive and High Profit Potential Scores between -6 to +9  Generally Moderately Attractive and Moderate Profit Potential Scores less than -6  Generally Unattractive and Low Profit Potential These results would suggest that the industry is not attractive and prospects for long-term profitability for the industry are low.

Industry Analysis Feasibility Assignment Deliverables For Checkpoint #3 (due Thur., November 11, 2010) Determine the industry within which your firm will compete Compile general information about the industry (e.g., industry size, growth rate, number of competitors, market share across competitors, etc.) Conduct a Porter’s Five Forces Analysis on the industry Determine how each separate force impacts the industry’s attractiveness and prospects for long-term profitability Determine the overall industry attractiveness and prospects for long-term profitability based on the analysis