Identifies and analyzes five competitive forces that shape every industry, it helps to determine strengths and weaknesses .
1. Define your market.
2. Draw the five forces matrix (see front).
3. Identify the supplier power.
List the number of suppliers in the model, the uniqueness of your product & the cost of changing the client indicates how easy is it for the supplier to drive up the price and gain control.
4. Identify the buyers’ power.
List the importance of each user and the cost for them to switch to a competitor shows how easy it is for the users/customers to drop the price.
5. Describe the competitive rivalry.
List competitors with similar products that influence your power.
6. Define the threat of substitutes in the market.
Are competitors able to do what you offer?
7. Define the threats of new entries.
How high is the barrier of entry to the market, are scalable businesses in place, can you protect your technology?
8. Describe the impact on your business.
Have a defined product, customer segment and market.
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