Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of the
points that candidates may make but this does not imply that any of these must
be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Porter's five force model is a framework for analysing the nature of
competition within an industry and can be used to identify the potential
profitability of a particular strategic decision
- It does so by looking at five main factors - threat of substitutes, threat
of new entrants, bargaining power of buyers, bargaining power of
suppliers and competitive rivalry
- Bramwell Brown could use the model to quickly assess its position within
the marketplace and how each of the 5 forces affects it
- For example, it could analyse the threat of new entrants or new
substitute products and the impact on its market share
- Bramwell Brown can then look at what strategic changes are needed to
protect itself against new entrants and potential substitute products by
trying to increase barriers to entry and increase brand loyalty
- Bramwell Brown could analyse the bargaining power of its suppliers for
the 150 parts that go into the weather clock to see if there are substitute
suppliers in times of raw material shortages
- By using the model Bramwell Brown could look to take advantage of its
strong position and help it to avoid taking poor strategic decisions in the
future
- However, it is only a management tool and relies on the skills of the
person being able to analyse the competitive environment
- Bramwell Brown is a small business that may not have access to market
data or be able to apply the model to such a unique product
- It could be argued that due to its uniqueness, Bramwell Brown faces little
competition as it is the only product on the market so does not need to
use this model to analyse the rivalry amongst existing competitors
- Porter's five force model is a management and decision-making tool
which must be used in conjunction with other decision-making tools such
as PESTLE or a SWOT analysis to increase its effectiveness