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Porters 5 forces

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Porters 5 forces

Post  daheff on Wed Feb 02, 2011 1:32 pm

Here is my model. Is there enough detail here? Does anybody have anything different?

Porters 5 Forces

Bargaining Power of suppliers
Low –able to centralise procurement to get better deals. Lots of large & small suppliers.
Skilled construction workers have high supplier power – but market is down 10% so more unemployed skilled workers.

Threat of market entry
Low- Set up costs are high(machinery, tenders, materials- usually need to fund project until stage payments are made). Construction is very capital intensive industry. Economies of scale make it difficult for new entrants to compete.

Bargaining Power of buyers
High- tenders must be submitted for projects. Number of projects are down so each tender must be more competitive that in previous years.

Substitute products or services
Low- For some products there are substitutes (eg prefabricated buildings for some hospitals/ school buildings) – but none for roads/ stadia office blocks (although some smaller offices can be substituted by prefabs too

Rivalry among existing firmsHigh- Reduced opportunities and large number of companies has made the industry extremely competitive (as seen by margin in industry being really low).


Last edited by daheff on Thu Feb 03, 2011 1:31 am; edited 1 time in total

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Re: Porters 5 forces

Post  gruffy8 on Wed Feb 02, 2011 5:11 pm

Threat of market entry would be low wouldnt it?

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Re: Porters 5 forces

Post  daheff on Thu Feb 03, 2011 1:30 am

you are right...typo on my part! Embarassed

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Porter

Post  Claire McGovern on Sat Feb 05, 2011 8:07 am

I would argue that the suppliers are powerful due to the rising price of commodities.

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Re: Porters 5 forces

Post  khanfaraz54 on Sat Feb 12, 2011 9:16 am

Low demand of construction materials in the industry would result in low supplier power.

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