Porter forces five Essay Example | Topics and Well Written Essays - 250 words

Porter forces five - Essay Example However, several forces shape the competition within the business industry. Porter identifies five distinct forces that affect the competition involving industries. These involve the bargaining power of suppliers, bargaining power of buyers and the threat of new entrants in to the market (Hill and Jones, 2010). In addition, the threat of substitute products as well as the rivalry between the existing competitors also forms the key factors that shape the industry. It is significant to note that new entrants may bring several changes in the market. These entrants may come up with good products that favorably compete the already existing ones. This follows that such entries always follow an up to date research. The entry of such new industries can pose major challenges to the already existing industries offering the same products (Hill and Jones, 2010). As such, the entry can lead to fluctuation in prices of goods thereby minimizing the profits made by the other industries. Such new entrants may also command a large customer base following their improved products sold at low prices, thus posing greater risks to the other rival industries. The rivalry amongst the existing competitors can also shape the business industry in many ways. Such rivalries may lead to price fluctuations (Ahlstrom and Bruton, 2010). This makes the consumers purchase goods at very low prices at the expense of the industry. In this case, the industry generally makes losses since they are forced to lower their prices to suit the current state of the market. Again, if such rivals compete on price, it presents a good opportunity for entry of new entrepreneurs in to the market, thereby flooding the market with well-researched goods (Henry, 2011). This leads to reduction in profits to such industries. The bargaining power of buyers also affects the industries in several perspectives. When the bargaining power of the buyers is very high, it means several goods will be bought at a