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Analysing the environment - Five Forces Analysis
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Analysing the environment - Five Forces Analysis Five forces analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyse the market for Business Computers i.e. one of its SBUs. Five forces looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. The threat of entry. * Economies of scale e.g. the benefits associated with bulk purchasing. * The high or low cost of entry e.g. how much will it cost for the latest technology? * Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? * Cost advantages not related to the...
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