Case: SM-0406 Industry Structure Five Forces Analysis You have been hired by an investment bank as an analyst. Your first assignment is to rank the attractiveness (prot potential) of three industries, so that the firm can focus its search efforts for potentially lucrative acquisitions for a client. Using the data below conduct three industry analyses employing the Five Forces model. First, indicate what each the 5 forces is. Second, evaluate whether the power of each force is lo_w or mgh within each industry (A, B, and C). Finally, rank the industries in terms of attractiveness. Power of Force Power of Force Power of Force in Industry A in Industry B in Industry C Name of Force (low or high) (low or high) (low or high) Given this information, which industry appears to be the most attractive? Which industry is the secondmost attractive? Which industry is the least attractive? INDUSTRY INFORMATION Industry A Industry B Industry C Investment in production processes required Small Large Large Product Commodity Commodity Differentiated Access to distribution channels Unrestricted Restricted Restricted Number of suppliers of raw materials Few Few Numerous Switching costs incurred when changing suppliers Large Large None Likelihood of suppliers integrating forward Small Small Large Number of buyers of industry products Few Few Numerous Likelihood of buyers integrating forward Large Small Small Likelihood of buyers integrating backward Large Large Small Size of buyers of industry products Large Large Small Switching costs incurred by industry's consumers None None Large Rate of industry growth Low Low High Performance of alternatives to industry's product High Low Low Cost of alternatives to industry's product Low High High Number of competitors Many Many Few Relative sizes of competitors Relatively equal Relatively equal Large imbalance Fixed cost of exit High High Low