"The competition is alive and hungry - continue to relentlessly move the business forward!"
The five forces are the following:
IV. Supplier Power
V. Barriers to Entry / Threat of Entry
The power of buyers is the impact customers have on an industry. When buying power is strong, the relationship to the producing industry is near to what an economist terms monopsony - a market in which there are many suppliers and one buyer. The following are key factors to determine buyer power:
As Keith Allen stated, “Business-to-government companies target fewer buyers that have enormous purchasing power and more dependable shopping lists.”
Buyers are Powerful:
- Buyers are concentrated - there are a few buyers with significant market share.
- Buyers purchase a significant proportion of output - distribution of purchases or if the product is standardized.
- Buyers possess a credible backward integration threat - can threaten to buy producing firm or rival.
Buyers are Weak:
- Producers threaten forward integration - producer can take over own distribution/retailing
- Significant buyer switching costs - products not standardized and buyer cannot easily switch to another product.
- Buyers are fragments - no buyer has any particular influence on product or price.
- Producers supply critical portions of buyers' input - distribution of purchases.
Strategic Planning - Porter's 5 Forces - Industry Analysis (Part 2 of 5)
Strategic Planning - Porter's 5 Forces - Industry Analysis (Part 1 of 5)
Strategic Planning - 3 components of a Mission Statement (Part 3 of 3)
Strategic Planning - 3 components of a Mission Statement (Part 2 of 3)
Strategic Planning - 3 components of a Mission Statement (Part 1 of 3)
Strategic Plan - Set the Future!
Strategic Planning - PEST Analysis