Final answer:
The MICRO external environment in Porter's 5 Forces model consists of industry rivalry, supplier power, buyer power, threat of substitutes, and threat of new entrants.
Step-by-step explanation:
The 5 components of the MICRO external environment in Porter's 5 Forces model are:
- Industry Rivalry: This refers to the level of competition among existing firms in the industry. Factors that contribute to industry rivalry include the number of competitors, market size, and product differentiation.
- Supplier Power: Supplier power is the ability of suppliers to influence the terms and conditions of the supply. This can be influenced by factors such as the number of suppliers, availability of substitute inputs, and supplier concentration.
- Buyer Power: Buyer power is the ability of buyers to influence the terms and conditions of the purchase. Factors that affect buyer power include the number of buyers, buyer concentration, and availability of substitute products.
- Threat of Substitutes: This refers to the likelihood of customers switching to alternative products or services. Factors that contribute to the threat of substitutes include price performance of substitutes, switching costs, and buyer propensity to substitute.
- Threat of New Entrants: This refers to the likelihood of new firms entering the industry and competing with existing firms. Factors that influence the threat of new entrants include barriers to entry, economies of scale, and access to distribution channels.