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Given this information, which industry appears to be the most attractive? Which industry is the second-most attractive? Which industry is the least attractive? Industry Information Investment in production processes required Product Access to distribution channels Industry A Small Industry B Large Industry C Large Commodity Commodity Differentiated Unrestricted Restricted Restricted Number of suppliers of raw materials Few Few Numerous Switching costs incurred when changing suppliers Large Large None Likelihood of suppliers integrating forward Small Small Large Number of buyers of industry products Few Few Numerous Likelihood of buyers integrating forward Large Small Small Likelihood of buyers integrating backward Large Large Small Size of buyers of industry products Large Large Small Switching costs incurred by industry's consumers None None Large Rate of industry growth Performance of alternatives to industry's product Cost of alternatives to industry's product Low Low High High Low Low Low High High Number of competitors Relative size of competitors Many Many Few Relatively Equal Relatively Equal Large Imbalance Fixed cost of exit High High Low

Given this information, which industry appears to be the most attractive? Which industry is the second-most attractive? Which industry is the least attractive? Industry Information Investment in production processes required Product Access to distribution channels Industry A Small Industry B Large Industry C Large Commodity Commodity Differentiated Unrestricted Restricted Restricted Number of suppliers of raw materials Few Few Numerous Switching costs incurred when changing suppliers Large Large None Likelihood of suppliers integrating forward Small Small Large Number of buyers of industry products Few Few Numerous Likelihood of buyers integrating forward Large Small Small Likelihood of buyers integrating backward Large Large Small Size of buyers of industry products Large Large Small Switching costs incurred by industry's consumers None None Large Rate of industry growth Performance of alternatives to industry's product Cost of alternatives to industry's product Low Low High High Low Low Low High High Number of competitors Relative size of competitors Many Many Few Relatively Equal Relatively Equal Large Imbalance Fixed cost of exit High High Low

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
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Industry Structure:  Five Forces Analysis

You have been hired by an investment bank as an analyst.  Your first assignment is to rank the attractiveness (profit potential) of three industries, so that the firm can focus its search efforts for potentially lucrative acquisitions for a client.  Using the data below, conduct three industry analyses employing the Five Forces model.  First, indicate what each of the 5 forces is.  Second, evaluate whether the power of each force is low or high within each industry (A, B, and C).  Finally, rank the industries in terms of attractiveness.

Name of Force

Power of Force in Industry A (low or high)

Power of Force in Industry B (low or high)

Power of Force in Industry C (low or high)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Given this information, which industry appears to be the most attractive? Which industry is the second-most attractive? Which industry is the least attractive? Industry Information Investment in production processes required Product Access to distribution channels Industry A Small Industry B Large Industry C Large Commodity Commodity Differentiated Unrestricted Restricted Restricted Number of suppliers of raw materials Few Few Numerous Switching costs incurred when changing suppliers Large Large None Likelihood of suppliers integrating forward Small Small Large Number of buyers of industry products Few Few Numerous Likelihood of buyers integrating forward Large Small Small Likelihood of buyers integrating backward Large Large Small Size of buyers of industry products Large Large Small Switching costs incurred by industry's consumers None None Large Rate of industry growth Performance of alternatives to industry's product Cost of alternatives to industry's product Low Low High High Low Low Low High High Number of competitors Relative size of competitors Many Many Few Relatively Equal Relatively Equal Large Imbalance Fixed cost of exit High High Low
Transcribed Image Text:Given this information, which industry appears to be the most attractive? Which industry is the second-most attractive? Which industry is the least attractive? Industry Information Investment in production processes required Product Access to distribution channels Industry A Small Industry B Large Industry C Large Commodity Commodity Differentiated Unrestricted Restricted Restricted Number of suppliers of raw materials Few Few Numerous Switching costs incurred when changing suppliers Large Large None Likelihood of suppliers integrating forward Small Small Large Number of buyers of industry products Few Few Numerous Likelihood of buyers integrating forward Large Small Small Likelihood of buyers integrating backward Large Large Small Size of buyers of industry products Large Large Small Switching costs incurred by industry's consumers None None Large Rate of industry growth Performance of alternatives to industry's product Cost of alternatives to industry's product Low Low High High Low Low Low High High Number of competitors Relative size of competitors Many Many Few Relatively Equal Relatively Equal Large Imbalance Fixed cost of exit High High Low
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