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The Five Forces Analysis

1. Applying the Five Forces Model to a few industries (give 5 industries examples).

2. How should we define industries, and why does that matter?

3. Five Forces Model: Enhancing its scope and application to include four levels.

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1. Applying the Five Forces Model to a few industries (give 5 industries examples)

The Five Forces Model:
(A) Threat of New Entrants
(B) Power of Suppliers
(C) Power of Buyers
(D) Availability of Substitutes
(E) Competitive Rivalry

(a) Airline Industry ?(A) An airline with a strong brand name can lure a customer even if its prices are higher. (B) There isn't a lot of competition among suppliers. (C) The bargaining power of buyers in this industry is low. (D) There aren't much substitute to an airline. (E) Highly competitive industries generally earn low returns since cost of competition is high.

(b) Banking Industry ?(A) An average person can't easily start up a bank. (B) The suppliers of capital is not a big threat. (C) One factor affecting the power of buyers is high switching costs. (D) There are plenty of substitutes in the banking industry. (E) This industry is highly competitive.

(c) Internet Industry ?(A) The cost of entry has fallen fast and now it is lower than before. (B) Generally, portals have little power over ...

Solution Summary

The solution discusses on the Five Forces Model and examples are given for five industries. Also included in the solution is how the Five Forces Model can be enhanced and its application which included four levels more. The solution also defines industries and why it matters. References for more information are also listed.

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