How do you assess the intensity of rivalry among existing competitors in your sector?

1 Porter's five forces

Porter's five forces is a model that analyzes the attractiveness and profitability of an industry based on five factors: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers , the threat of substitute products or services, and the intensity of rivalry among existing competitors. The intensity of rivalry depends on factors such as the number and size of competitors, the degree of differentiation, the level of fixed costs, the exit barriers, and the industry growth rate. A high intensity of rivalry means that competitors are constantly fighting for market share, lowering prices, increasing innovation, and improving quality, which reduces the profit potential for the industry.

3 How to use both frameworks

To use both frameworks effectively, you need to conduct a thorough research on your industry, your competitors, and your customers. You can use secondary sources, such as industry reports, market surveys, and academic journals, or primary sources, such as interviews, observations, and experiments. You can also use tools, such as PESTEL analysis, value chain analysis, and benchmarking, to complement your data collection and analysis. Once you have gathered enough information, you can use Porter's five forces to assess the overall attractiveness and profitability of your industry, and SWOT analysis to evaluate your specific position and performance within the industry.

5 How to identify opportunities and threats

To identify opportunities and threats for your business, you need to examine the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products or services. The threat of new entrants depends on the barriers to entry, such as capital requirements, economies of scale, brand loyalty, customer switching costs, access to distribution channels, and government regulations. You can reduce the threat of new entrants by creating strong entry barriers, such as patents, trademarks, customer loyalty programs, or exclusive contracts. The bargaining power of suppliers depends on the number and concentration of suppliers, the uniqueness and differentiation of their products or services, the availability of substitutes, the importance of their products or services to your business, and the switching costs for you. You can reduce the bargaining power of suppliers by diversifying your sources, increasing your own bargaining power, or backward integrating. The bargaining power of buyers depends on the number and concentration of buyers, the sensitivity and elasticity of their demand, the availability of substitutes, the importance of your products or services to them, and the switching costs for them. You can reduce the bargaining power of buyers by segmenting your market, creating loyal customers, or forward integrating. The threat of substitute products or services depends on the relative price, quality, performance, and availability of the substitutes, and the willingness and ability of customers to switch to them. You can reduce the threat of substitute products or services by improving your product or service features, benefits, and quality, or by creating switching costs or lock-in effects.