Fr, Michael Porters Five Forces Analysis - Coursework Example

The forces have been referred to a microenvironment in the framework. The businesses have to reassess the market place in case of any changes to the forces. On the other hand, it is also important to note that the level of profitability for the organizations may not be the same despite operating in the same industry. The five forces can also be classified as horizontal or vertical. The horizontal forces include threat of substitute products or services, threat of new entrants and industry rivalry.

The vertical forces include the bargaining powers of suppliers and bargaining powers of customers. Porter five forces analysis plays an important role in terms of enabling the businesses to gain more profitability and stability. On the other hand, the government also uses the framework for the purposes of stabilizing the industries. This framework has is usually used by most of the companies that intent to enter a new market. The cycle wear industry that FLAB operates in faces a threat of new entrants since it is profitable.

The government policies on the industry are not strict which makes it easy for new entrants to enter the market. The capital requirement is not too high although any new entrant in the market has to meet the demands of the cyclists including those with 60 inch waist. The entry barrier in the industry is high due to patent issues since different designs have to be made to satisfy the needs of the customers. However, despite the entry barriers, the exit barriers are low. The presence of high entry barriers and low exit barriers is an indication that the industry is profitable (Vining, 2011).

In the industry, the customer loyalty is not a major issue considering that most of the companies are unable to provide the cyclewear for the people with up to 60 inch waist. The customers usually move from one company to the other in search of required products. The bargaining powers of the customers in the