The Porter five-force model
什么是波特五力分析模型What is a Porter five-force analysis model
The Porter Five Force Analysis Model was proposed by Michael Porter in the early 1980 s and has a global profound impact on corporate strategy making. The analysis of competitive strategy can effectively analyze the customer competitive environment.
According to Porter's view, competition in an industry is not only in the original competitors, but there are five basic competitive forces, the status of the five basic competitive forces and comprehensive strength, determines the competition intensity of the industry, thus determines the final profit potential in the industry and the flow of capital to the industry, all this ultimately determines the ability to maintain high profitability. The five forces are: the bargaining power of suppliers, the bargaining power of buyers, the ability of potential competitors to enter, the substitution power of substitutes, and the current competitiveness of competitors in the industry. Changes in different combinations of the five forces ultimately affect the change in industry profit potential.
Porter five-force analysis belongs to the micro environmental analysis in the external environmental analysis, mainly used to analyze the enterprise competition pattern of the industry and the relationship between the industry and other industries. It is essentially an application tool of management thought in the strategic level of enterprise marketing management practice activities, which requires our enterprise marketing managers to manage the enterprise from the perspective of strategic analysis. Emphasis is a kind of strategic consciousness, or the use of strategic thinking.
波特五力分析模型详解The Porter five-force analysis model is solved in detail
The special five-force analysis model gathers a large number of different factors in a simple model to analyze the basic competition situation of an industry. The five power models identify five major sources of competition, namely the bargaining power of suppliers, the bargaining power of buyers, the threat of potential entrants, the threat of alternatives, and competition from companies currently in the same industry. These five competitive forces determine the profitability of the industry, and indicate that the core of the enterprise strategy should be in choosing the right industry and the most attractive competitive position in the industry.
The proposal of a feasible strategy should first include identifying and evaluating these five forces, and the characteristics and importance of the different forces vary by industry and company, as shown in the following figure:
①供应商的议价能力（Bargaining Power of Suppliers）
The supplier mainly affects the profitability and product competitiveness of the industry through its ability to improve the price of the input elements and reduce the value quality of the existing enterprises in the unit. The strength of the supplier mainly depends on what input elements they provide to the buyer. When the input elements provided by the supplier constitute the value of a large proportion of the total cost of the buyer, very important to the production process of the buyer, or seriously affects the quality of the buyer, the supplier's potential bargaining power for the buyer is greatly enhanced. In speaking, the supplier group that meets the following conditions will have a strong bargaining force:
-The supplier industry is controlled by some enterprises with relatively firm market position not suffering from plagued by fierce competition in the market, with many buyers of their products, so that it is impossible for every individual buyer to become an important customer of the supplier.-The supplier industry is controlled by some enterprises with relatively firm market position not suffering from plagued by fierce competition in the market, with many buyers of their products, so that it is impossible for every individual buyer to become an important customer of the supplier.
-The products of the supplier enterprises have certain characteristics, so that it is difficult to convert or cost too high, or difficult to find alternatives that can compete with the supplier's enterprise products.
-The supplier can easily implement forward union or integration (the ability to vertically extend the industrial chain), while it is difficult for buyers to combine backward or integrate.
②购买者的议价能力（Bargaining Power of Buyers）
Buyers mainly affect the profitability of existing businesses in the industry mainly by pressing prices and requiring the ability to provide higher quality of products or services. Generally, buyers who meet the following conditions may have a strong bargaining force:
-The products purchased by buyers account for too large proportion of the overall sales of enterprises's products, which virtually increases their right to bargain in business negotiations. The client is God, and the big client who decides is the God of God.
-The seller's industry consists of a large number of relatively smaller businesses.
-What the buyer buys is basically a standardized product, and it is economically feasible to buy from multiple vendors.
-The purchaser has the ability to achieve backward integration, which the seller cannot integrate forward. For example, a milk powder factory can be easier to acquire pasture, and the pasture is not easy to open a dairy enterprise.
③新进入者的威胁（Threat of New Entrants）
New entrants in the industry to bring new production capacity, new resources at the same time, and the market has been divided into the industry, new enterprises to get a place, this may occur with the existing enterprises raw materials and market share competition, eventually lead to the existing enterprise profitability in the industry, serious and may endanger the survival of these enterprises. The threat of new entry companies is determined by two reasons:
-Response of existing businesses to new entrants. It is expected that the response of the existing enterprises to the entrants is mainly the possibility of revenge action, which depends on the financial situation, revenge record, scale of fixed assets and industry growth rate of the relevant manufacturers. In short, the possibility of a new enterprise to enter an industry depends on the relative size of the entrants to subjectively estimate the potential benefits, the cost, and the risk to bear.
-New businesses enter new domain barriers to size and expected gains. The barriers to entry mainly include economy of scale, product differences, capital needs, conversion costs, sales channel development, government behavior and policies (such as petrochemical enterprises), uncontrolled scale cost disadvantages (such as trade secrets, production and marketing relations, learning and experience curve effects, etc.), natural resources (such as metallurgy ownership of minerals), geographical environment (such as shipyards can only be built in coastal cities), some of which are difficult to be overcome through replication or imitation.
The threat of entry depends on the extent to which barriers to entry exist in the market. Barriers to entry are barriers necessary to overcome by new entrants who want to compete successfully. Barriers to entry usually delay potential entrants to the market, but do not constitute permanent barriers, and barriers may prevent a lot of potential entrants, but not all.
The business is not only competing with our competitors in the usual sense, but there are several other aspects, such as pork manufacturers ' competitors not only from other pork manufacturers, but also beef and mutton manufacturers, these beef and mutton are called substitutes for pork. The ements have similar performance to existing products or services to meet the same needs. Two companies in the same or different industries may have competitive behavior between them because the products produced are mutual substitutes. The threat of alternatives is in:
-The increase in product prices and profit potential of existing enterprises will be limited by the existence of alternatives that are readily acceptable to users;
-Due to the intrusion of substitute producers, existing enterprises have to improve product quality, or reduce selling prices or make them characteristic of their products, otherwise their goal of sales and profit growth may be frustrated;
-The competitive strength of alternative producers, affected by the conversion cost of product buyers.
Almost any product has its own alternative products, but the degree of substitution is different, these alternatives also maximize to ensure that any monopoly industry can not infinitely expand the price of the product. Such as beef and mutton to replace each other. Internet telephone, mail and telecommunications are all alternatives to telecommunications, and coal and oil are also high alternatives, and the existence of these alternatives also restricts the increase in the prices of these monopoly products. The most important thing to be noted in the replacement is the replacement of new technologies and the generation of new products to the original demand, which may be that the original demand is basically disappeared. Such as, the generation of digital cameras, so the market demand for film photos disappeared. The lower the substitute price, the better the quality, and the lower the user conversion cost, the stronger competitive pressure; the strength of this competitive pressure from substitute producers can be described by examining the sales growth rate, production capacity and profitability of substitutes.
Most enterprises in the industry, the interests of each other are closely linked, as part of the overall strategy of enterprise competition strategy, its goal is to make their own enterprises to gain the advantage of the competitors, so, in the implementation will inevitably produce conflict and confrontation phenomenon, these conflict and confrontation constitute the competition between existing enterprises. Competition between existing enterprises is often manifested in price, advertising, product introduction, after-sales service, etc., and its competition strength is related to many factors.
In general, the following situations will mean increased competition among existing companies in the industry, in four situations:
-Low barriers to entry, more close competitors and a wide range of competitors; enterprises in the industry are unable to market marketing strategies for competitors.
-The market tends to mature, the product demand is growing slowly, the market competition among enterprises is low, and the means of competition is relatively single, which can only be promoted by reducing product prices or improving the marketing budget for advertising.
-Competitors offer almost the same product or service, with a low cost of user conversion;
- 在巨大的竞争压力下有时候企业决策层不得不采用“赌博”的方式参与市场竞争。一个战略行动如果取得成功，其收入相当可观；但一次战略决策的 错误可能让企业永不翻身。企业的经营决策迫于市场压力面临巨大风险。
-Under the huge competitive pressure, sometimes corporate decision makers have to "gamble" to participate in market competition. A strategic action earns considerable revenue for success; but a false strategic decision may never turn over. Business decisions of enterprises face huge risks due to market pressure.
-The strong companies outside the industry launched offensive actions after receiving the weak enterprises in the industry, which made the newly received enterprises the main contenders in the market;
-Exit barriers are high, where exit competition is more costly than continuing in competition. Here, the obstacles to exit are mainly affected by economic, strategic, emotional and social and political relations, including the specificity of assets, the fixed cost of exit, strategic mutual containment, emotional unacceptance, various restrictions of the government and society, etc.
Every business in the industry must more or less address the threats of these forces unless head-to-head is necessary and beneficial to protect itself by setting barriers to entry including differentiation and conversion into nature. When a business identifies its strengths and weaknesses (see SWOT analysis), it must position to direct the situation, not impaired by anticipated environmental changes such as product life cycle, industry growth, and then protect itself and prepare to respond effectively to other actions.
According to the above discussion for five kinds of competitive forces, enterprises can take as far as possible their own operation from competitive forces, efforts to start from their own interests to affect industry competition rules, occupy favorable market position before launching offensive competition action to deal with the five competitive forces, in order to enhance their market position and competitive strength.
波特五力分析模型的意义The significance of the Potter five-force analysis model
When using the Porter five-force analysis model, We mainly through analysis of five competitive forces in the business or industry, Can help us understand the threats to the business or the industry and the possible profits, For example, if an enterprise upstream suppliers and downstream buyers have a strong bargaining ability, It is foreseeable that, The business will survive very tired, It is even difficult to sustain it, Like many garment OEM factories in China, Upstream are powerful fabric manufacturers, but downstream are strong brand clothing makers, These subplants almost survive in the crevice between the two, Little profit. Conversely, If a business upstream suppliers and downstream buyers have weak bargaining power, The company will live more moist, Such as the powerful big supermarkets, home appliance stores, Because they have the numerous consumers, Therefore, we put forward various unreasonable requirements for the upstream manufacturers, Such as store entry fee, store celebration fee and so on, And as their consumers again belong to scattered individuals, Basically no bargaining power, So they are relatively strong at both the upstream and downstream forces.
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