COMPETITIVE FORCES Prepared by: Mahmoud Dalloul Supervisor: Ms. Yasmin Al Bobo UP 3( )

Competitive Forces  Awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack.

Porter’s Competitive Forces 1. Rivalry of competitors within an industry 2. Threat of new entrants into an industry 3. Threat posed by substitute products which might capture market share 4. Bargaining power of customers 5. Bargaining power of suppliers

Porter’s Competitive Forces

Rivalry of competitors  Online-shopping, E-commerce increase rivalry  Price comparison tools (Google Product Search, Shopzilla, etc.) increase rivalry.  Price transparency  Industries with high rivalry?  Industries with low rivalry?

Threat of new entrants  E-commerce enables a business to emerge overnight  A medium-sized retail store can become a global E- commerce competitor at little cost. Whereas, it costs a lot to become a global donut competitor

Substitute Products Internet makes substitutes easier to find.  Can’t afford to fly...take a train.  Ipod to expensive...buy a Microsoft Zune

Bargaining power Customer:  E-commerce has empowered the customer  Examples:  Ebay  Lending Tree  Reverse auctions  Drives prices down! Suppliers:  Example: A leading supplier can force retailers to invest in their Supply Chain Mgmt. system.  Pushes costs on to the retailer  More profit for the suppliers