{"id":1265,"date":"2019-06-02T11:37:54","date_gmt":"2019-06-02T09:37:54","guid":{"rendered":"https:\/\/inspire.edu.pl\/?p=1265"},"modified":"2020-06-18T15:08:17","modified_gmt":"2020-06-18T13:08:17","slug":"understanding-porters-five-forces","status":"publish","type":"post","link":"https:\/\/inspire.edu.pl\/en\/understanding-porters-five-forces\/","title":{"rendered":"Understanding Porter\u2019s Five Forces"},"content":{"rendered":"[vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1\/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” overlay_strength=”0.3″ column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]\n

Business Strategy<\/h2>\n

In his analysis of the industry\u2019s structure, Michael Porter points to the following factors eroding industry profitability:<\/p>\n

    \n
  1. The product is one of many such commodities available on the market<\/li>\n
  2. Everybody generates the same costs and has access to the same technology<\/li>\n
  3. Buyers pay attention to prices, are knowledgeable and ready to instantly switch to another vendor to get more benefits<\/li>\n<\/ol>\n

    Hence the importance of\u2026<\/p>\n

    \u2026Entry and Mobility Barriers<\/p>\n

      \n
    1. Economy of scale<\/strong> \u2013 the bigger the scale of production, the lower the operational costs.<\/li>\n
    2. Product differentiation<\/strong> \u2013 the company which differs from its competitors is under less of a competitive pricing pressure.<\/li>\n
    3. Monopoly of key components of a success<\/strong> in the industry, i.e. patents and strategic location.<\/li>\n
    4. Sunk costs<\/strong> \u2013 the costs that cannot be recovered once the firm has made a market exit.<\/li>\n
    5. Distribution channels<\/strong> \u2013 even the best company will not become successful without the access to distribution channels.<\/li>\n
    6. Costs of a vendor replacement<\/strong>\u2013 the company is in a better strategic position if the costs of a vendor replacement have to be incurred by clients.<\/li>\n<\/ol>\n

      The company should create entry or mobility barriers for its market rivals<\/p>\n

      Examples of entry barriers: a frequent user programme.<\/strong><\/p>\n

      Invented by the airlines, frequent user programmes are designed to award clients who often buy a certain product.<\/p>\n

      Such programmes are most effective in the case of expensive products or services which are or can be purchased relatively often.<\/p>\n

      Examples of entry barriers include:<\/p>\n

        \n
      • Strategic location:\n
          \n
        • Petrol stations<\/li>\n
        • Fast food restaurants<\/li>\n
        • Shops\/ department stores<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

          What can you do to set up entry or mobility barriers for your current or potential competitors?<\/p>\n

          Mirella Piwiszkis<\/strong>
          \nBusiness Psychologist, Mentor, Founder of INSPIRE<\/p>\n[\/vc_column_text][\/vc_column][\/vc_row]\n","protected":false},"excerpt":{"rendered":"

          [vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1\/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” overlay_strength=”0.3″ column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text] Business Strategy In his analysis…<\/p>\n","protected":false},"author":6,"featured_media":1668,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-1265","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-inspire"},"acf":[],"yoast_head":"\nUnderstanding Porter\u2019s Five Forces | Inspire<\/title>\n<meta name=\"description\" content=\"FIve Forces of Porter - What do you need to know to understand them? 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