Horizontal Competition: Threat of Substitute Products, the Threat of Established Rivals, and the Threat of New Entrants; and Two Forces from Vertical Competition

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According to Porter (1980) this model includes three forces from horizontal competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from vertical competition: the bargaining power of suppliers and the bargaining power of customers: Mario’s Pizza Five forces ● Switching costs are low. ● The saturation in the industry is ● The products that they need huge. are high volume and not ● Speedy and reliable channels are differentiated. essential among all firms. ● Cost disadvantages are significant. ● Lot of substitutes.● Switching costs are nearly ●To many subsƟtutes exist inzero. Thus finding a second the industryoption is easy.● Customers bargaining power ●The threat of substitutes isis likely to be low. very high. ● High rivalry among firms. ● Huge number of companies offering the same product. Source: Self-made o Bargaining power of suppliers Domino’s pizza suppliers have low bargaining power because the number of suppliers who can sell to Domino’s pizza the products that they need is high volume and not differentiated. In addition to it, the switching costs from one supplier to another are so easy and tend to make up a large portion of the supplier’s revenue. This severely limits the bargaining power of the suppliers. There are also a lot of substitutes for the particular input. Suppliers are not a problem for domino’s pizza, at least until now they have no problem