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Discuss the following Porter's Five Forces:

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Power of buyers

Competitive rivalry/Power of competitors

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Power of buyers

  • Buyers are the final users of products/services.
  • Business must assess how easy it is for its buyers/customers to drive prices down.
  • This will depend on the number of buyers/the importance of each buyer to the business and the cost of switching to other products.
  • A few powerful buyers, are often able to dictate terms to the business.
  • If customers can do without the business’s products√ they may have more power to determine the prices and terms of sale.
  • Businesses should conduct market research to gather more information about its buyers.
Competitive rivalry
  • Competitors are businesses selling the same/similar products or rendering the same/similar services.
  • If the competitors have a unique products /services they have greater power.
  • The business must draw up a competitor's profile of each similar business in the area√ to determine its strength/Business should determine how many competitors there are and how influential they are in the market.
  • If a business has many competitors with similar products the business will have very little power in the market.
  • Some businesses have the necessary resources to start price wars√ and continue selling at a loss until some/all competitors leave the market.
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