FIVE FORCE MODEL OF INSURANCE INDUSTRY

Saurav Pansari 0911321 Suraj Kumar 0911322

FACTORS AFFECTING RIVALRY AMONG EXISTING COMPETITORS

FACTORS 1. DEGREE OF SELLER CONCENTRATION 2. RATE OF INDUSTRY GROWTH 3. SIGNIFICANT COST DIFFERENCES AMONG FIRMS 4. EXCESS CAPACITY 5. COST STRUCTURE OF FIRMS: SENSITIVITY OF COSTS TO CAPACITY UTILIZATION 6. DEGREE OF PRODUCT DIFFERENTIATION AMONG SELLERS? BRAND LOYALTY TO EXISTING SELLERS? CROSS-PRICE ELASTICITIES OF DEMAND AMONG COMPETITORS IN INDUSTRY? 7. BUYERS COSTS OF SWITCHING FROM ONE COMPETITOR TO ANOTHER? 8. ARE PRICES AND TERMS OF SALES TRANSACTIONS OBSERVABLE? 9. CAN FIRMS ADJUST PRICES QUICKLY? 10. STRENGTH OF EXIT BARRIERS?

CURRENT TREND 13 pvt. & 1public 12.5% NOT MUCH N/A SENSITIVE

FUTURE TREND High Degree 15% EXPECTED N/A HIGHLY SNSITIVE

LESS DEGREE OF PRODUCT DIFFERENCIATION. HIGH BRAND LOYALTY.

HIGH DEGREE OF PRODUCT DIFFERENCIATION. HIGH BRAND LOYALTY. HIGH

HIGH

YES YES VERY STRONG

YES YES STRONG

FACTORS AFFECTING THE THREAT OF ENTRY

PARTICULARS
1. SIGNIFICANT ECONOMIES OF SCALE 2. IMPORTANCE OF REPUTATION OR ESTABLISHED BRAND LOYALTIES IN PURCHASE DECISION? 3. ENTRANTS ACCESS TO DISBN. CHANNELS 4. ENTRANTS ACCESS TO RAW MATERIALS 5. ENTRANTS ACCESS TO TECHNOLOGY 6. ENTRANTS ACCESS TO FAVORABLE LOCATIONS?

CURRENT TREND INITIALLY DIFFICULT SIGNIFICANT

FUTURE TREND NOT VERY DIFFICULT SIGNIFICANT

DIFFICULT N/A EASY EASY

NOT THAT DIFFICULT N/A EASY EASY MANY TOUGH PLAYERS

7. EXPERIENCE-BASED MANY ADVANTAGES OF INCUMBENTS? 8. PERCEPTIONS OF ENTRANTS TOUGH PLAYERS ABOUT EXPECTED RETALIATION OF INCUMBENTS/REPUTATIONS OF INCUMBENTS FOR TOUGHNESS?

FACTORS AFFECTING OR REFLECTING PRESSURE FROM SUBSTITUTE PRODUCTS

PARTICULARS AVAILABILITY OF CLOSE SUBSTITUTES PRICE VALUECHARACTERISTIC OF SUBSTITUTES PRICE ELASTICITY OF INDUSTRY DEMAND AVAILABILITY OF CLOSE COMPLEMENTS PRICE VALUE CHARACTERISTIC OF COMPLEMENTS

CURRENT

FUTURE

NOT MANY NOT HIGH

MANY VERY HIGH

LOW MANY FIXED FOR ALL

HIGH MANY EXPECTED TO CHANGE

FACTORS AFFECTING OR REFLECTING POWER OF INPUT SUPPLIERS

PARTICULARS IS SUPPLIER INDUSTRY MORE CONCENTRATED THAN INDUSTRY ITSELLS TO FEW SUBSTITUTES FOR SUPPLIERS INPUT DO FIRMS IN INDUSTRY MAKE RELATIONSHIP SPECIFIC INVESTMENTS TO SUPPORT TRANSACTIONS WITH SPECIFIC SUPPLIERS DO SUPPLIERS POSE CREDIBLE THREAT OF FORWARD INTEGRATION INTO THE PRODUCT MARKET ARE SUPPLIERS ABLE TO PRICEDISCRIMINATE AMONG PROSPECTIVE CUSTOMERS ACCORDING TO ABILITY / WILLINGNESS TO PAY FOR INPUT?

CURRENT NO

FUTURE NO

YES NO

YES NO

YES

YES

YES

YES

FACTORS AFFECTING OR REFLECTING POWER OF BUYERS

PARTICULARS IS BUYERS INDUSTRY MORE CONCENTRATED DO BUYERS PURHASE IN LARGE VOLMES? CAN BUYERS FINND SUBSTITUTES FOR INDUSTRYS PRODUCT DO FIRMS IN INDUSTRY MAKE RELATIONSHIP-SPECIFIC INVESTMENTS TO SUPPORT YTRANSACTIONS WITH SPECIFIC BUYERS

CURRENT NO
N/A

FUTURE NO
N/A

YES

YES

YES

YES

IS PRICE ELASTICITY ON DEMAND HIGH OF BUYERS PRODUCT HIGH OR LOW? DO BUYERS POSE CREDIBLE THREAT OF BACWARD INTEGRATION? DOES PRODUCT REPRESENT IN SIGNIFICANT FRACTION OF COST N/A

HIGH

N/A

YES

YES