According to Michael Porter (1980), there are five forces that drive industry competition: direct competitors or rivals; barriers to entry; substitute products or services; customer power; and supplier power. These forces will determine whether or not your small business will be profitable and sustainable. In the Discussion Board "Unit 2: Market Analysis", discuss the following forces of competition, which relate to your particular business or industry.
Competitors - Identify a small business that sells the same product or service as your company. Explain why you consider the company is your competitor or rival. Define a strategy on how you think you can remain competitive or eliminate the company's competition.
Barriers to entry - Are there certain factors, which might keep potential small businesses out of your industry. Discuss ways to keep new competitors from entering your industry.
Substitute products/services - Is there another product or service, which functions the same as your product or service or could be used as a substitute? If the value of your product or services begins to decline, your business could become less profitable. Discuss ways your company can do to preserve and uphold the value of your company' s product or service.
Customer power - What is the customer demand for your company's product or service? Are there options for customers to obtain your company's product or services elsewhere for a better price or selection? Define ways your company can influence its customers buying decisions.
Supplier power - Does your company have to rely on one particular supplier to produce its product/service or does it buy it materials from several suppliers? A single supplier could increase its prices or limit supply and thus affect your company's profitability. Identify ways in which you can reduce the power of your suppliers.