1. The competitive situation in the industry

- Who are the competitors within the market and what is the balance of power between them?

– What is the significance of competition parameters such as:

• price (lower prices/higher market shares)
• branded brand (strong brand/preferred)
• the market's growth potential (low growth/high growth)
• capacity (production capacity)
• financial resources (capital strong or not)
• innovativeness (first with the new or follower)
• horizontal integration (acquisition of competitors)
• vertical integration (acquisition of suppliers or building own distribution channels)
• exit barriers (if production equipment is difficult to convert to other production)

2. The customers and their bargaining power

– Divided into the bargaining power of end customers (consumer) and the bargaining power of intermediaries (producer).

– The analysis can look at the customers' buying behaviour, criteria for choice and negotiating power (e.g. purchase size, purchase volume, possibility of finding similar products and possibility of price comparison).

3. Competition from substituted products

– The wider competition is described in relation to product alternatives.

– Consider price, switching costs (does it require an investment to move) and new technology that gives customers other options (e.g. music CD vs. free streaming)

– Remember: that competing products are NOT substituted products. Competing products appear under "1. The competitive situation in the industry”.

4. The suppliers and their bargaining power

– How is the suppliers' bargaining power in the industry? Are there suppliers with almost a monopoly = stronger and more expensive to do business with?

– Number and size of suppliers

– Standard or differentiated products

5. The threat of new invaders

- What entry barriers are there for new competitors if they want to establish themselves in the industry?

- As the industry grows, the likelihood of new entrants is greater

- The industry is more protected if a high degree of capital, brand, patent, economies of scale are required.

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