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 m within each industry (A, B, and C). Finally, rank the industries in terms of attractiveness. Power of Force in Industry C (low or high) Power of Force in Industry B (low or high) Power of Force in Industry A Name of Force (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 Investment in production processes required Product Access to distribution channels Number of suppliers of raw materials Switching costs incurred when changing suppliers Likelihood of suppliers integrating forward Number of buyers of industry products Likelihood of buyers integrating forward Likelihood of buyers integrating backward Size of buyers of industry products Switching costs incurred by industry's consumers Rate of industry growth Performance of alternatives to industry's product Cost of alternatives to industry's product Number of competitors Relative sizes of competitors Fixed cost of exit Industry A Small Commodity Unrestricted Few Large Small Few Large Large Large None Low High Low Many Relatively equal High Industry B Large Commodity Re stricted Few Large Small Few Small Large Large None Low Low High Many Relatively equal High Industry C Large Differentiated Restricted Numerous None Large Numerous Small Small Small Large High Low High Few Large imbalance Low 1. You should first name the Five Forces on the left side of the sheet. 2. You should then use the Industry Information in the box for Industries A, B, & C below to complete the power of each force in Industry A, B, & C by marking low or high for each force for each industry below. Name the Force Ind A Ind B Ind C H/ L H/L H/L H/ L H/L H/L H/ L H/L H/L H/ L H/L H/L H/ L H/L H/L You then will mark which industry (A, B, or C) appears to be the most attractive, the second most attractive, and the least attractive. 1. 2. 3