Michael Porter’s five forces model of industry analysis best way to gain competitive
advantage; strategic planning
1. Supplier power: how much influence does a supplier have in the industry and how is it
exerted? Is there a need to consider a strategy that includes the supplier as a partner?
2. Buyer power: how much influence does an individual buyer have in the industry and how
is it exerted? What is the price sensitivity among various buyer groups? Is there a need to
consider a strategy that includes the buyer as a partner?
3. Threat of substitutes: is there a switching cost to switch to a rival’s products and what are
the trade-offs and comparisons between alternatives and substitutes?
4. Barrier to entry: if a particular barrier to entry (patents, large investment, specialized
knowledge) is identified, how can you cross it and then keep it up to slow down
5. Industry rivalry: what are the exit barriers, product differences, brand power, growth rate
in industry, fixed costs among firms, concentrations of firms in market share, etc.?
Competitiveness summary for the pharmaceutical industry
Chemical manufacturers are suppliers to the pharmaceutical companies. switching