Checklist ON Porter’s Five Force Analysis

1. Threat of new entrants: Yes (+) No (-) Remarks 1. Do large firms have a cost or performance advantage in your segment of the industry? 2. Are there any proprietary product differences in your industry? 3. Are there any established brand identities in your industry? 4. Do your customers incur any significant costs in switching suppliers? 5. Is a lot of capital needed to enter your industry? 6. Is serviceable used equipment expensive? 7. Does the newcomer to your industry face difficulty in accessing distribution channels? 8. Does experience help you to continuously lower costs? 9. Does the newcomer have any problems in obtaining the necessary skilled people, materials or suppliers? 10. Does your product or service have any proprietary features that give you lower costs? 11. Are there any licenses, insurances or qualifications that are difficult to obtain? 12. Can the newcomers expect strong retaliation on entering the market? Note: = + factors (favorable to industry) = - factors (unfavorable to industry) 2. Bargaining power of buyers: to what extent are your customers locked into you? Yes (+) No (-) Remarks 1. Is there a large number of buyers relative to the number of firms in the business? 2. Do you have a large number of customers, each with relatively small purchases? 3. Does the customer face any significant costs in switching suppliers? 4. Does the buyer need a lot of important information? 5. Is the buyer aware of the need for additional information? 6. Is there anything which prevents your customer from taking your function in-house? 7. Your customers are not highly sensitive to price? 8. Your product is unique to some degree or has accepted branding? 9. Your customers’ businesses are profitable? 10. You provide incentives to the decision makers? Note: = + factors (favorable to industry) = - factors (unfavorable to industry) 3. Threat of substitutes: (some other products or services which perform the same job as yours) Yes (+) No (-) Remarks 1. Substitutes have performance limitations which do not completely offset their lowest price, or, their performance advantage is not justified by their higher price. 2. The customer will incur costs in switching to a substitute. 3. Your customer has no real substitute. 4. Your customer is not likely to substitute. Note: = + factors (favorable to industry) = - factors (unfavorable to industry) 4. Bargaining power of suppliers Yes (+) No (-) Remarks 1. My inputs (materials, labor, supplies, services, etc.) are standard rather than unique or differentiated. 2. I can switch between suppliers quickly and cheaply. 3. My suppliers would find it difficult to enter my business or my customers would find it difficult to perform my function in-house. 4. I can substitute inputs readily. 5. I have many potential suppliers. 6. My business is important to my suppliers. 7. My cost of purchases has no significant influence on my overall costs. Note: = + factors (favorable to industry) = - factors (unfavorable to industry) 5. Determinants of rivalry among existing competitors Yes (+) No (-) Remarks 1. The industry is growing rapidly. 2. The industry is not cyclical with intermittent overcapacity. 3. The fixed costs of the business are a relatively low portion of total costs. 4. There are significant product differences and brand identities between the competitors. 5. The competitors are diversified rather than specialized. 6. It would not be hard to get out of this business because there are no specialized skills and facilities or long-term contract commitments, etc. 7. My customers would incur significant costs in switching to a competitor. 8. My product is complex and requires a detailed understanding on the part of my customer. 9. My competitors are all of approximately the same size as I am. Note: = + factors (favorable to industry) = - factors (unfavorable to industry)        

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