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Five Forces Analysis
Michael Porter's five forces Analysis is a tool for the structural analysis and shape the competitive structure of the company. The objective of strategic planning is to modify these competitive forces such that the company's position is improved. Management can decide how to influence or to develop industry characteristics, based on the information given by the Five Forces model. There are:
2.1 Threat of New Entrants: New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. New entrants frequently bring additional capacity to an industry. Thus it is possible that prices will be bid down and industry profits diminished. In the knitwear industry, new entrants could quickly enter the industry because it costs little in time or money to enter the market and compete effectively, and there are few economies of scale in place, or have little protection for the key technologies, so that new competitors can quickly enter the market.
Michael Porter's five forces Analysis is a tool for the structural analysis and shape the competitive structure of the company. The objective of strategic planning is to modify these competitive forces such that the company's position is improved. Management can decide how to influence or to develop industry characteristics, based on the information given by the Five Forces model. There are:
2.1 Threat of New Entrants: New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. New entrants frequently bring additional capacity to an industry. Thus it is possible that prices will be bid down and industry profits diminished. In the knitwear industry, new entrants could quickly enter the industry because it costs little in time or money to enter the market and compete effectively, and there are few economies of scale in place, or have little protection for the key technologies, so that new competitors can quickly enter the market.