Porter's Five Forces of Competition Model
             The understanding of Michael E. Porter's five competitive forces illustrated in his book; bargaining power of suppliers, bargaining power of customers, threat of new entrant, threat of substitutes and competitive rivalry between existing players is very important to evaluate organizations. Porter's model helps an organization understand its external opportunities and threats. Based on Porters five forces the organization can decide how to manipulate certain characteristics of their industry. These five forces stress the importance of competition in the industry.
             Bargaining Power of Suppliers: Suppliers are all the sources for inputs that you need to produce goods and services. Suppliers bargaining power is high when the market is ruled by few large suppliers, the customers are split so their bargaining power is low. There are no substitutes in the market for the supplier's product. There is also the case where buyers can be a hindrance to suppliers by not accepting the new products in the markets. The switching costs from one supplier to another are also high. When demand for certain products is low there
             are only a few big suppliers and they have to compete with one another for customers.
             Bargaining Power of Customers: All the firms want to increase their profit margin but in contrast the customers or buyers want to pay the lowest price possible. This cuts into the profit margins of the firms. Customers have a higher bargaining power when they buy in large quantities. There are a lot of small suppliers in contrast to a few large suppliers. The consumers also have a high bargaining power when there are a lot of substitutes for the products they are looking for. Customers are aware the production costs on the product. Internet has changed everything now the bargaining power has increased because it's a lot easier and the costs are not as high to switch fro
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