Dollinger index

The Environment for Entrepreneurship 93

SOURCE:

Adapted from The Free Press, A Division of Simon & Schuster, from

Competitive Advantage: Creating and Sustaining Superior Performance by

Michael

E. Porter. Copyright

©

1985 by Michael E. Porter.

F
IGURE 3.2 Elements of Industry Structure

Economies of scaleProprietary product differencesBrand identitySwitching: costsCapital requirementsAccess to distributionAbsolute cost advantages

Proprietary learning curveAccess to necessary inputsProprietary low-cost product design

Government policyExpected retaliation

Industry growthFixed (or storage) costs/value addedIntermittent over caparityProduct differencesBrand identitySwitching costsConcentration and balanceInformational complexityDiversity of competitorsCorporate stakesExit barriers

Bargaining

power

of suppliers

Differentiation of inputsSwitching costs of suppliers and firmsin the industryPresence of substitute inputsSupplier concentrationImportance of volume to supplierCost relative to total purchases in

the industry

Impact of inputs on cost or differentiationThreat of forward integration relative to

threat of backward integration by firmsin the industry

Determinants of supplier power

Suppliers

Determinants of buyer power

Determinants ofsubstitution threatRelative priceperformanceof substitutesSwitching costsBuyer propensityto substitute

Buyer concentrationversus firm concentrationBuyer volumeBuyer switching costsrelative to firmswitching costsBuyer informationAbility to backwardintegrateSubstitute productsPull-through

Price/totall purchasesProduct differencesBrand identityImpact on quality/performanceBuyer profitsDecision makers’incentives

New

entrants

Bargaining powerof buyers

Buyers

Threat ofsubstitutes

Substitutes

Threat ofnew entrants

¾

¾

¾

¾

Industry

competitors

Intensity of rivalry

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