Bargaining

power of distributors
Rivalry
among
A distributors bargaining exisGng
posiGon is strong when: compeGtors
It can control customers
access to a parGcular
Five
Threat of Threats of
organizaGons goods and subsGtute new
services products entrants

It can threaten an
organizaGon by demanding
Forces
it reduce the price of its
goods and services
Model
E.g. Park&Shop, Welcome, Bargaining Bargaining
power of power of
759 customers suppliers

45 46

CompeGGve Forces
What is the Five Forces Model? Poten1al for entry Will it be easy for compe1tors to join the industry?
(Threats of new entrants) The lower the barriers to entry, the higher the threats if new
entrants
The ve forces model Easy entry leads to lower prices and prots
represent the potenGal Power of suppliers How much bargaining power do suppliers have?
(Bargaining power of If there are only a few suppliers of important items, supply costs
threats in the external suppliers) rise
environment Power of customers How much bargaining power do buyers (customers) have?
(Bargaining power of It tells how much inuence buyers have over organizaGons in an
buyers) industry
The ve forces shows If there are only a few large customers, they can bargain down
prices
how much prot
Subs1tutes Will it be likely for our products to be subs1tuted by the
organizaGons compeGng (Threat of subsGtutes) compe1tors products?
SomeGmes an organizaGons prot
in the same industry are drops may due to overall decline of More available subsGtutes tend to drive down prices and prots
expected to make: how protability of the whole industry Level of rivalry How intense is the compe11on among the exis1ng
(Current rivalry) organiza1ons in an industry?
aNrac1ve is that Will there be many potenGal compeGtors?
industry? 47 Fierce compeGGon drives down prices and prots 48

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