Porters 5 Forces
Define Porters 5 Forces
Porter’s 5 forces: a strategy developed by Michael E. Porter in 1979 that describes how all organizations must develop plans to deal with certain factors if they wish to succeed, or even continue to exist.
A strategy focused on creating a new market space with little or no competition.
Blue Ocean
A company that enters a market before its competitors is called what?
What does JIT stand for?
Just in Time
What does SWOT Analysis mean?
Strengths, Weaknesses, Opportunity, and Threats
List Porters 5 Forces
Existing Competitors, New Competitors, Suppliers, Customers, and Substitutes.
A strategy focused on competing in an existing market is called what?
Red ocean
A company waits to see what competitors do, learns from their mistakes, and then enters the market. First mover or follower? Explain.
Follower.
What is the main goal of a JIT inventory system?
Keep inventory low by receiving materials close to when they are needed.
What does PESTEL Analysis mean?
PESTEL analysis: refers to including, in a business analysis, political, economic, socio-cultural, technology, and environmental factors as well as legal considerations.
Which force measures how much power customers have when negotiating prices?
Bargaining power of buyers.
What is the main difference between a red ocean and a blue ocean?
Blue ocean creates new market space; red ocean competes in an existing market.
What is one advantage of being a first mover?
Examples: brand recognition, customer loyalty, patents, early market share.
Why can JIT reduce inventory costs?
Less money tied up in inventory and lower storage/carrying costs.
What are examples of political factors?
New taxes, labor laws
A company faces a market where innovation occuring. Which force is this?
New Competitors
A company creates a completely new product category and attracts customers who previously had no market option. Blue or red ocean?
Blue ocean.
What is one advantage of being a follower?
Followers can learn from the first mover's mistakes and potentially avoid some of its costs/risks.
What is one major risk of JIT?
Supply disruptions can stop production because there is little inventory buffer.
Threat.
If Company A and Company B both raises prices what Force might take action.
Subsutites.
Explain how a company using a blue ocean strategy tries to make competition less important.
It creates new demand/value rather than primarily fighting competitors for existing customers.
A first mover may gain this by establishing its brand before competitors enter.
First-mover advantage / early brand recognition.
Why might JIT work well for a company with reliable suppliers but create problems when supply chains are disrupted?
Reliable suppliers make JIT more effective; disruptions can cause shortages and production delays.