SWOT and Porter’s five forces analysis

Description

PORTER’S FIVE FORCES ANALYSIS 1. Threats of new entry Consider how easily others could enter your market and threaten your company’s position. Answer the following questions: ·        How much does it cost and how long does it take to enter your market? ·        What are the barriers to entry (e.g. patents, rights, etc.)? ·        What does it take to make the business scalable? ·        Did you protect your key technologies? ·        How strictly is your market regulated? If competitors can enter your market with little money and effort, you will need to adapt your strategy to handle any potential rivals. 2. Threat of substitution This section of the Five Forces asks you to determine the likelihood that your customers will replace your product or service with an alternative that solves the same need. Answer these questions: ·        What are the differentiators between your product/service and the substitute? ·        How many substitute products are available in this market? ·        What is the cost of switching to a substitute product? ·        How difficult would it be to make the switch? ·        What products or services can you offer that might substitute a market leader? 3. Bargaining power of suppliers This section analyzes how easily suppliers could increase their prices and thus affect your bottom line. Answer these questions: ·        How many suppliers does your company have? ·        How unique is the product or service that they provide? ·        How many alternative suppliers can you find? How do their prices compare to your current supplier? How expensive would it be to switch from one supplier to another? Remember that your supplier will think strategically, just as you are. If your supplier understands that few other companies could fulfill the same need, they could charge your more for their unique service. 4. Bargaining power of buyers On the other end, you also need to determine whether buyers have the power to drive your prices down. Answer these questions: ·        How many buyers control your sales? ·        How large are the orders you receive? ·        Could your buyers switch suppliers—and how much would it cost for them to switch? ·        How important is your product/service to your buyers (i.e. what is the ROI of your product/service)? These questions help determine the leverage your clients have to dictate the cost. The more customers you have, the more power you retain. 5. Competitive rivalries The four previous forces largely affect this last one. You need to look at the number and strength of your existing competitors. Answer these questions: ·        How many competitors do you have? ·        Who are your biggest competitors? ·        How does the quality of their products or services compare with yours? ·        What distinguishes your company from the competition? ·        What will it cost one of your customers to switch to a competitor?   SWOT INTERNAL STRENGTHS ·        What do our customers love the most? ·        What are we more efficient at? ·        What can we do for less money? ·        What can we do in less time? ·        What makes us stand out? INTERNAL WEAKNESSES ·        Where do we lack efficiency? ·        Where are we wasting money? ·        Where are we wasting time and resources? ·        What do our competitors do better? ·        What are our top customer complaints? EXTERNAL OPPORTUNITIES ·        What is missing in our market? ·        What could we create or do better than a competitor? ·        What new trends are occurring? ·        What new technology could we use? ·        What openings in the market are there? EXTERNAL THREATS ·        What changes are occurring in our market’s environment? ·        What technologies could replace what we do? ·        What changes are occurring in the way we’re being discovered? ·        What social changes could threaten us? ·        Are there any threatening government policies or regulations? ACTION ITEM/GOAL ·        Which opportunities should we pursue? How can we use our strengths to help us succeed?