The Board of FF Supermarket is examining the company's current market position. As part of the review, the Board has asked for an analysis of industry competition to be undertaken in order to make the attractiveness of the industry and sources of competition.
Discuss the contribution of Porter's Five Forces model in assessing the attractiveness of the industry in which FF currently operates.
Porter's Five Forces model is a useful framework that FF Supermarket could use to help it assess the attractiveness of the supermarket industry. Industry attractiveness refers to the potential for profitability that explains from competing in that industry. Every industry's attractiveness, or profitability potential, is a direct result of interaction of dissimilar environment and industry forces that affect the nature of competition.
The model brings together the following five competitive forces:
• Threat of new entrants/barriers to entry
- Bargaining power of suppliers
- Bargaining power of buyers
- Threat of substitute products/services
- Competitive rivalry