Exercises: Competition: competitive forces

List Porter's five competitive forces and explain in one sentence what each analyses.

Indicate which of Porter's forces corresponds to each event: a new franchise opens opposite, the main supplier increases its prices by 20%, customers can switch brands at no cost, and a product appears that fulfills the same need in a different way.

The figure shows the diagram of the five competitive forces, with rivalry at the center. Identify the missing force, marked with '?', and explain under what conditions that force is strong.

A local coffee shop has three others on the same street. Analyse two of Porter's forces in its case: rivalry among existing competitors and the threat of new entrants (is it easy to open another coffee shop?), and suggest a way to differentiate itself.

A speciality coffee shop relies on a single coffee roaster that raises its prices every year. Explain which force it is suffering from, why the supplier has so much power in this case, and two strategies to reduce that dependency.

Barriers to entry (economies of scale, established brands, regulation, capital requirements) protect incumbent firms. Give an example of each type of barrier and explain what happens to rivalry and pricing when barriers are low.

Analyse the low-cost gym sector in a large city using the five forces (rivalry, new entrants, substitutes, bargaining power of customers and suppliers) and conclude, with a reasoned sentence, whether it is currently an attractive sector to enter.

A local food delivery platform competes with two international giants. Analyse its situation focusing on customer bargaining power (restaurants and end users) and substitutes (collecting food in person, cooking), and propose two realistic defences for the small platform.

"An industry with many competitors is always a terrible industry to enter." Refute this statement by applying Porter's five forces model:

1. a) Justify how the weakness of other competitive forces (customers, suppliers, or substitute products) can offset high rivalry and allow for attractive margins.
2. b) Illustrate your answer by proposing a specific example of a real company or subsector where strong rivalry among competitors exists but entering remains profitable, justifying which competitive advantage it would rely on.