Understanding porter five forces

Just came to understand Porter Five forces, to ascertain what forces make or break a business. Given below are five forces, and my personal experience with them

Porter Five forces :-

1. Threat of New Entrant
   1. Example of Indian E-commerce; where making an E-commerce website was very easy. And hence, the Industry was flooded with lot of players; and market did not grow that much. At the end, things got fizzled.
   2. And I think, Flipkart did the best, by doing too much of marketing; to create a loyal customer base. Which in itself created a barrier of entry for new players. I think, brand is a big threat to Entry.
2. Threat of substitute product/services
   1. It was same with E-commerce, when the customer is disloyal; it is easy for them to switch site. With COD, or cash on delivery; Customer became the king. So too much threat to the new player.
3. Bargaining power of customer
   1. If you have few customers, then one will need to bargain.
   2. As happened if you are a lubricant supplier to only one industry in your area. Then the industry will call the shots.
4. Bargaining power of suppliers
   1. Oh, it shows in the OECD who controls the world petroleum.
   2. The same with Samsung, who makes chip used in smart phone. It has the supplier power in the smart phone industry.
   3. Or, you can take CIL or Coal Indial Limited ; who has the supplier power of supplying coal to Indian Thermal Power Plants. For the past two years, the losses by Private Thermal Power Plant is because of CIL.
   4. Sometimes, while looking at the business, try to find out in the value chain; what kind of small supplies that can be controlled.
5. Intensity of Competitive rivalry
   1. Always seen in the Airlines industry, lot of blood bath.
   2. Also seen in industry where barriers to entry is low.

Understanding of them is good, as it is good during negotiations; especially in the Business.