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 analsysis looks at five key areas namely the threat …

…the need for dentists. * Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. * We could always do without e.g. cigarettes. Competitive Rivalry * This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram.