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Five Forces

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBL Exams › Five Forces

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by Ken Garrett.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • May 3, 2017 at 6:25 pm #384764
    syfar42
    Member
    • Topics: 61
    • Replies: 22
    • ☆☆

    In Five forces, suppose a company wants to do this analysis in their current situation and industry, then will the factors like bargaining power of customers, suppliers be seen on a wide scale including all its competitors?

    Or will the bargaining power of customers be analyzed according to their own company only?

    For example, Company A has a high bargaining power against its customers whereas Company B has low bargaining power against its customers
    In that way, will the Five forces be applied in industry level or relating to the specific company?

    May 4, 2017 at 6:43 am #384794
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    Generally, 5 forces relates to industry sectors, not individual firms. So, Nissan, VW and Ford all face similar pressures from customers and suppliers such as steel manufacturers.

    May 5, 2017 at 6:51 pm #384986
    syfar42
    Member
    • Topics: 61
    • Replies: 22
    • ☆☆

    But what if some companies in the industry have long term contracts where the prices are fixed for lets say the next 5 years with the suppliers and some don’t have these contracts, then how should I comment in such a situation?

    Because partly in some companies, the supplier power is low whereas in other companies, it is high. Eventhough all these have the same suppliers, its just the matter of contract which has reduced the power

    May 6, 2017 at 7:52 am #385037
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    Long term contracts are a recognised way of dealing with supplier and buyer power, to diffuse the issue for a while.

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