Professional Documents
Culture Documents
Commentary
Substitutes
(price/quality)
A substitute is capable of
achieving the same quality
at lower prices
3
Substitutes exist and
account for large
share on the market
Parameter score
2
Substitutes exist but
have only recently
entered the market and
account for small share
Total score
1 point
2 points
3 points
1
No known
substitutes
1
Small number of
players
(1-3)
Stagnation or
decline
Slowing growth
Rapid growth
Companies sell a
standardized
product
The product is
standardized
according to core
parameters but also
possess key
differing features
which provide
additional
advantages
The products of
different companies
substantially differ
from one another
Tough price
competition, lack of
opportunity to raise
prices
There is
opportunity to raise
prices but only at
the same rate as
growth in expenses
There is always an
opportunity to raise
prices to cover
growing expenses as
well as increase
profits
Parameter
Commentary
Number of
players
High level of
market saturation
Market growth
rate
Level of product
differentiation
Limitations on
raising prices
Total score
4 points
5-8 points
9-12 points
Commentary
The larger the production
volume, the lower the cost of
materials and the lower
overhead costs per item
created
The stronger the existing
brands on the market, the
more difficult it is for new
players to gain a foothold on
the market
Product
differentiation
Market entry
costs
Access to
distribution
channels
Government
policy
Readiness of
existing players
to lower prices
Industry growth
rate
3
Nonexistent
Parameter score
2
Only certain market
players have such
opportunities
1
Significant
No major players
Low level of
product diversity
Micro-niches exist
Low (payback
within 1-3 months
of start of
operations)
Medium (payback
within 6-12 months of
start of operations)
High (payback
period longer than
one year from start
of operations)
Access to
distribution
channels are full
open
Access to distribution
channels requires a
moderate level of
investment
Access to
distribution
channels is limited
The state
completely
regulates the
industry and
establishes
limitations
Existing players
will not lower
prices
Any attempt to
offer lower prices
will be met by
lower prices by
existing players
High and
increasing
Slowing
Stagnation or
decline
No limitations
imposed by the
state
Commentary
Share of buyers
accounting for
large portion of
sales
3
Several clients account
for more than 80% of
sales
Parameter score
2
A small portion of
clients account for
approximately 50% of
sales
1
The sales volume
is evenly
distributed among
all clients
The companys
product is entirely
unique and there
is nothing
analogous on the
market
Aptitude to
switch to
substitutes
Price sensitivity
Consumers are
not satisfied
with the level of
quality available
on the market
Lack of satisfaction
with the key features of
the product
Lack of satisfaction
with the secondary
features of the product
Full satisfaction
with the product
Total
4 points
5-8 points
9-12 points
Step three: Assess the threats to your business coming from suppliers
3.1. Bargaining power of suppliers
Parameter score
2
1
Small number of suppliers or
Large selection of
monopoly
suppliers
Parameter
Commentary
Number of
suppliers
Limitations in the
resources of
suppliers
No limitations
Supplier priorities
Total
4 points
5-6 points
7-8 points
Draw Cause and Effect Diagram (fishbone) which would depict key areas where quality issues can come from.