Module 6 · Equity

Industry and Competitive Analysis

EN: Porter's five forces, industry structure, and competitive position.
VN: Năm lực lượng cạnh tranh, cấu trúc ngành, vị thế cạnh tranh.

1. Porter's Five Forces Concept

Forces

1. Rivalry Existing competitors — concentration, growth, exit barriers.
2. New entrants Barriers to entry — capital, brand, regulation.
3. Substitutes Alternative products that meet the same need.
4. Buyer power Concentration of buyers, switching costs, price sensitivity.
5. Supplier power Concentration of suppliers, switching costs, importance of input.

2. Industry Lifecycle Concept

Five stages

Embryonic Slow growth, high prices, large investment, high risk.
Growth Rapid demand, falling prices, improving profitability.
Shake-out Slowing growth, intensifying competition, weak players exit.
Mature Slow growth, consolidated industry, stable margins.
Decline Negative growth, excess capacity, falling prices.

3. Competitive Strategies (Porter) Concept

Cost leadership Lowest-cost producer.
Differentiation Unique product/brand, premium pricing.
Focus Targeting a niche segment.

Practice problem Practice

Practice problem

An industry has many small firms producing identical commodities, near-zero switching costs for buyers, and easy entry. Rate Porter's five forces for an existing player.

Show solution

Rivalry: high (many firms, undifferentiated).

New entrants: high threat (low barriers).

Buyer power: high (zero switching costs).

Substitutes: medium-high (commodities have alternatives).

Supplier power: depends on inputs.

Profitability would be very low — perfect-competition setup. Existing players have minimal pricing power.