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Porter’s Five Forces:
Porter’s Five Forces (E. Dobbs, 2014) can be used to analyse the competitive advantage of small- scale businesses. This theory is based on the concept that there are five forces that determine the extent of rivalry among the existing competitors.
Competitive Rivalry: The competitive advantage of a small- scale business depends on the number and capability of the competitors.
Supplier Power: To understand whether suppliers have the power to drive up the prices or not. The uniqueness of the products or services can impact the strength of the suppliers hence cost the business of they need to switch the suppliers.Therefore, positive supplier relation is essential.
Buyer Power: To understand whether buyers have the power to drive up the prices or not. The buyers involved in the small- scale businesses are the customers. It is important for these businesses to have a positive relation with the regular customers as there is a chance of the customers to prefer other retailers in the market. Therefore, positive buyer relation is essential for the profitability.
Threat of Substitution: It is necessary to analyse whether there are businesses which sell similar products in the market. A change of price in the product can affect the profitability of the business. This would negatively impact competitive advantage.
Threat of New Entry: The number of small- scale businesses increase in the market due to the possibility of a profitable business. The factors such as customer service, product availability, customer loyalty affects