Imagine you’re asked to write an Enron case study using Porter's five forces model. This means you need to have complete clarity over how to use this model to prepare your management case study.
So, if you wish to gain a deeper understanding of Porter's five forces for preparing the Enron case study solution, here is a brief guide on this model.
Competition with the rival businesses
This element assesses how stiff the competition is in the marketplace. This element takes into account the number of existing competitors and what each one can do. Emphasize this factor while working on your Enron case study analysis and other case studies like Adidas case study and the Jaguar case study.
The competition can be high when only a handful of businesses sell a product or service. This is when the industry is growing, and consumers can easily switch to a competitor's offering for little cost. When rivalry is intense, advertising and price wars commence, which can hurt the bottom line of your business.
The threat of new entrants
This element delves into how easy or difficult it is for the competitors to join the marketplace. The convenient it is for a new competitor to enter, the higher the risk is of an established business's market share being reduced.
The challenges to entry include absolute cost advantages, access to inputs, economies of scale and proper brand identity.
The bargaining power of suppliers
Suppliers offer raw materials or other inputs for business. Their bargaining power has a direct influence on the business’ profit margins. This is because the price at which they sell inputs to businesses will decide the selling prices of the final products.
Suppliers tend to have high bargaining power in cases where they are only a handful of them, or there are no substitutes for supplies, or when there’s no unity between buying companies.
The bargaining power of consumers
Customers' bargaining power impacts a business' competitive strategy immensely. Consumers have the power to ask for lower prices in a system where their number is comparatively small compared to that of sellers. In these cases, when a consumer becomes dissatisfied with the pricing or quality of the product in a specific store, he/she can easily switch to the competitors. Again, if a business is the sole provider of a product or service, the client has limited bargaining power, and the business can be more aggressive in its pricing strategy.
The threat of alternative services or products
This factor emphasizes how easy it is for consumers to switch from a business's service or product to that of a competitor. It considers the number of competitors and their quality and pricing compared to the product they’re already using.
The factor also focuses on how much of a profit those competitors are earning, which would determine if they can reduce their expenses even more.