AAA Business - Five Forces Analysis

AAA Business - Five Forces Analysis

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Intensity of Existing Rivalry

Low storage costs (AAA Business) When storage costs are low, competitors have a lower risk of having to unload their inventory all at...
Large industry size (AAA Business) Large industries allow multiple firms and produces to prosper without having to steal market share...
Relatively few competitors (AAA Business) Few competitors mean fewer firms are competing for the same customers and resources, which is a...
Government limits competition (AAA Business) Government policies and regulations can dictate the level of competition within the industry. When...
Fast industry growth rate (AAA Business) When industries are growing revenue quickly, they are less likely to compete, because the total...
Exit barriers are low (AAA Business) When exit barriers are low, weak firms are more likely to leave the market, which will increase the...

Bargaining Power of Suppliers

Diverse distribution channel (AAA Business) The more diverse distribution channels become the less bargaining power a single distributor will...
Large number of substitute inputs (AAA Business) When there are a large number of substitute inputs, suppliers have less bargaining leverage over...
High competition among suppliers (AAA Business) High levels of competition among suppliers acts to reduce prices to producers. This is a positive...
Low concentration of suppliers (AAA Business) A low concentration of suppliers means there are many suppliers with limited bargaining power. Low...
Volume is critical to suppliers (AAA Business) When suppliers are reliant on high volumes, they have less bargaining power, because a producer can...
Critical production inputs are similar (AAA Business) When critical production inputs are similar, it is easier to mix and match inputs, which reduces...
Inputs have little impact on costs (AAA Business) When inputs are not a big component of costs, suppliers of those inputs have less bargaining power....
Low cost of switching suppliers (AAA Business) The easier it is to switch suppliers, the less bargaining power they have. Low supplier switching...

Threat of Substitutes

Substitute has lower performance (AAA Business) A lower performance product means a customer is less likely to switch from AAA Business to another...
Substitute is lower quality (AAA Business) A lower quality product means a customer is less likely to switch from AAA Business to another...
Substitute product is inferior (AAA Business) An inferior product means a customer is less likely to switch from AAA Business to another product...
Substantial product differentiation (AAA Business) When products and services are very different, customers are less likely to find comparable product...
Limited number of substitutes (AAA Business) A limited number of substitutes mean that customers cannot easily find other products or services...
High cost of switching to substitutes (AAA Business) Limited number of substitutes means that customers cannot easily switch to other products or...

Bargaining Power of Customers

Large number of customers (AAA Business) When there are large numbers of customers, no one customer tends to have bargaining leverage....
Limited buyer choice (AAA Business) When customers have limited choices they end up paying more for the choices that are available....
Product is important to customer (AAA Business) When customers cherish particular products they end up paying more for that one product. This...
Limited buyer information availability (AAA Business) When buyers have limited information, they are at a disadvantage in negotiations with sellers....
Buyers require special customization (AAA Business) When customers require special customizations, they are less likely to switch to producers who have...
Low dependency on distributors (AAA Business) When produces have low dependence, distributors have less bargaining power. Low dependency...
Low buyer price sensitivity (AAA Business) When buyers are less sensitive to prices, prices can increase and buyers will still buy the product....

Threat of New Competitors

High switching costs for customers (AAA Business) High switching costs make it difficult for customers to change which products they normally...
Strong distribution network required (AAA Business) Weak distribution networks mean goods are more expensive to move around and some goods don’t get to...
High sunk costs limit competition (AAA Business) High sunk costs make it difficult for a competitor to enter a new market, because they have to...
High capital requirements (AAA Business) High capital requirements mean a company must spend a lot of money in order to compete in the...
Strong brand names are important (AAA Business) If strong brands are critical to compete, then new competitors will have to improve their brand...
Advanced technologies are required (AAA Business) Advanced technologies make it difficult for new competitors to enter the market because they have to...
Industry requires economies of scale (AAA Business) Economies of scale help producers to lower their cost by producing the next unit of output at lower...
Patents limit new competition (AAA Business) Patents that cover vital technologies make it difficult for new competitors, because the best...
Customers are loyal to existing brands (AAA Business) It takes time and money to build a brand. When companies need to spend resources building a brand,...
Geographic factors limit competition (AAA Business) If existing competitors have the best geographical locations, new competitors will have a...
High learning curve (AAA Business) When the learning curve is high, new competitors must spend time and money studying the market...
Entry barriers are high (AAA Business) When barriers are high, it is more difficult for new competitors to enter the market. High entry...

What is Porter's Five Forces Analysis?

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