Five Forces Widget Sub-analysis
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What are Porter’s Five Forces of Competition?
by Nathanael Okhuysen
Industrial organization is a field of study that examines the differences between the “perfect” competition among companies found in economics textbooks, and the “imperfect” competition found in the real world. One tool derived from the field is Michael Porter’s “five forces” analysis, from the very beginning of his seminal book, Competitive Strategy. Porter developed the five forces analysis as a more rigorous variation of the widely used SWOT analysis. The framework focuses on the level of competition within an industry to evaluate a company’s strategic position. In contrast to the SWOT analysis, the five forces survey the business environment, rather than examining a particular firm itself. Along with the PEST analysis, it digs deeper into the Opportunities and Threats of the SWOT.
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Storyboard Description
Five Forces Sub-Analysis - An in-depth look at the factors which influence new entrants to the widget industry.
Storyboard Text
- No Key Intellectual Property
- Profitability
- Economies of Scale
- While some widget production processes are still patented, many alternatives exist and are widely available for a nominal cost. This benefits new entrants.
- The widget industry is not remarkably profitable. This will deter new entrants.
- The low margins on widget production are primarily due to cost of raw materials. Profitability comes through mass production. This impedes new entrants.
- Internal Regulations
- Welcome to the 83rd annual WMC convention.
- Factors Impacting Entry into the Widget Industry
- Expensive Facilities
- Since the Great Widget Collapse of 1937, the Widget Manufacture's Consortium instituted stricter marketing rules to protect consumers and burden new entrants.
- Modern widget production requires significant land, structures, and machinery. These items usually require extensive capital investment, raising barriers to entry.
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