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Lecture 3 - Porter’s Five Forces Competitive Analysis
(Researched Examples in blue)
Porters 5 Forces Model is a good analysis of the current situation in determining the answer to
where are we now? in the planning cycle
The 5 forces are:
Existing Competitors
Threats from New Entrants
Threats of Substitutes
Bargaining power of Suppliers
Bargaining power of buyers

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The strength of these forces ultimately affects the profitability of the industry and a firms ROI
(Return on investment)
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First the industry competitors need to be identified, their objectives, strategies, strengths and
weaknesses, their potential reactions
Coca Colas 5 Forces Model
Competitors: Moderate Strength

- Coca cola is market leader at 64%
Substitutes: High Threat

- Any other beverage which may be cheaper and healthier or more accessible
New Entrants: Low Threat
Good distribution
Brand Identity
Market Leader
Capital Requirements

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Supplier Power: Moderate

- Ingredients
- Packaging
- Distributors

Buyer Power: Low
- Sponsorship deals give exclusivity
- Brand loyalty
- Own many other soft drink brands Fanta and Sprite
Competitors can be placed in clusters of strategic groups, in order to identify and differentiate them
Kotler’s Market Structure States there are Market Leaders, Market Challengers, Market Followers
and Market Nichers
Market Leaders: Tesco
Challengers: ASDA Sainsburys
Followers: Morrisons
Nichers: Iceland

In order to analyse the competitive environment an organisation should devise an impact matrix
displaying the relative opportunity and threat each force provides

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