State and explain two factors in porters five forces framework

Porter’s five forces framework assesses market competitiveness and profitability. The five factors included in porters five forces are threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes and competitive rivalry.Threat of new entrants assesses how easy it is for firms to move into the market. Barriers to entry reduce the number of firms that can enter a market. An example of a barrier to entry is the time and cost for firms to establish themselves in a market. For example, the pharmaceutical industry has high barriers to entry because of the large amount of time and capital investment required to bring new drugs to market. This means it is harder to enter the market, however, this reduces competition for incumbent firms and increases profitability.The power of suppliers affects profitability for suppliers and buyers in a market. If there are many suppliers and few buyers, the buyers have greater bargaining power. This can be seen in the supermarket industry where there are numerous dairy suppliers and only a few supermarkets. Therefore, supermarkets demand a low price from suppliers which significantly reduces supplier profitability.