...Introduction The porter forces model was first developed in 1979 by Michael .F. Porter of the Harvard as structure for assessing and evaluating the competitive position and power of an organization, the model is grounded on the concept that there are five forces which ascertain the competitive intensity of the market (Porter, 2008). Figure 1.1 shows a diagram of the five forces model, (Flesicher, 2007) Porter’s five forces model is quite useful and it provides a number of benefits , its most contribution is that it's a relevant tool to help organizations find the fundamental structuring components of their given business operation. It is the map showing where the company is and where they hope or want to be (Flesicher, 2007).Further more Schmidt (p.82, 2010) adds that “The model help to identify where the power is in the present business situation, This is important both in understanding the might of a company’s current competitive situation and the power of a position that the company wants to move to.”By understanding where the intensity is, the model can be used to identify the areas of strength, to improve failings and prevent mistakes; also strategic analysts often use the theory to know if new products or services are potentially profitable (Roy, 2011). The five forces model is a tool for analysising the competitive environment as Henry (p.70, 2008) states that “It allows an organization to determine the attractiveness or profit potential of a given market by...
Words: 1358 - Pages: 6
...The Porter's Five Forces Tool The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps to understand both the strength of any organization’s current competitive position, and the strength of a position that the organization considering moving into. With a clear understanding of where power lies, organizations can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of organization’s planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However, it can be very illuminating when used to understand the balance of power in other situations. Porter's 5 Forces are named after Michael E. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. The forces are, 1. Competition in the industry 2. Potential of New Entrants into Industry 3. Power of Suppliers 4. Power of Buyers 5. Threat of Substitute Products Readymade Garments(RMG) Industry of Bangladesh Bangladesh, the southern Asian country has a population of approximately 164 million people. The economy of Bangladesh is significantly dependent on agriculture. But it’s a great news for the country that, readymade garments (RMG) sector of Bangladesh...
Words: 2163 - Pages: 9
...INDUSTRY COMPETITION: Amazon exists in a highly competitive e-commerce industry with tough competitors like Apple, Barnes and Noble, E-Bay. However Amazon has competitive advantage in the following aspects: i) Pioneer Advantage: Amazon established its niche as the first online book seller in the year 1997. Today Amazon is the nation’s biggest book seller and world’s largest online retailer (New York Times, 2012). Amazon has managed to keep up with technology by investing in cloud computing and bringing to market mobile devices like Kindle e-reader. The recently announced Kindle Fire is another strategic differentiator in Amazon product portfolio. Kindle Fire facilitates delivery of Amazon’s services and content to customers, and provides them the mobile-device experience. It has established itself as the leading Android tablet with a 54.4 percent market share (comScore, 2012). ii) Amazon’s main focus on customer satisfaction has ensured their position in the on-line retail market. Amazon is highly invested in providing customers convenience, selection, prices and personalized services (Mirow, 2005). Amazon’s e-commerce platforms with highly granular array of choices and mobile shopping apps, have vastly improved the shopping experience for the customers. According to a recent online retail customer satisfaction survey, Amazon topped the list, outdoing competitors like Apple, eBay, Netflix, Best Buy, Walmart (techcrunch, 2012). iii) Amazon has been experiencing marked...
Words: 1247 - Pages: 5
...In a landmark article published in the March/April 1979 issue of the Harvard Business Review, Michael Porter identified five competitive forces that determine if you should enter a new market segment. The “Five Forces” are: 1. Intense Rivalry. A category can already have too much competition between aggressive competitors, which can be amplified by high fixed costs or exit barriers or if the current category members have high stakes in staying in the segment. A hyper-competitive environment will most likely lead to non-stop price wars, advertising battles, and a constant introduction of new products that will make it difficult to profit. Snack food is an example of a category with intense rivalry. Take a walk down the snack foods aisle at your local supermarket – there’s at least one new product introduction and several new promotions each week. 2. New Entrants. Some of the most attractive categories are ones where entry barriers are high are exit barriers are low. It’s hard for new competitors to enter the category, and it’s easy for poor performers to exit. When both entry and exit barriers are high, there’s a lot of potential profit but there’s also a danger of poor performers staying and fighting it out. When both entry and exit barriers are low, there isn’t a lot of profit potential but profits are generally stable. The worst-case scenario (which you should almost always avoid) is when entry barriers are low and exit barriers are high – lots of new competitors flood the...
Words: 652 - Pages: 3
...Porter’s Five Forces A competitive strategy must meet the opportunities and threats inherent in the external environment; it should be based on an understanding of industry and economic change. Porter identifies five forces that shape every industry and which determine the intensity and direction of competition and therefore the profitability of an industry. The objective of strategic planning is to modify these competitive forces such that the organization’s position is improved. Management can then decide, based on the information given by the Five Forces model, how to influence or to exploit industry characteristics. Bargaining Power of Suppliers The term “suppliers” comprises all sources for inputs necessary to provide products. And “supplier power” refers to their relative bargaining power, which, when high, allows significant influence on the industry and expropriation of profits. Home Depot’s expense controls and cost initiatives – its core competencies – derive in part from efficient supply chain management. The company also plans to centralize purchasing operations and to decrease merchandise inventories, both of which will further reduce the power of its suppliers. That the primary source of both planned and actual efficiencies in this area, however, derive largely from cost initiatives and financial policy, points to the firm’s emphasis on cost leadership. But Lowe’s has already established centralized logistics systems based not so much on economies...
Words: 1066 - Pages: 5
...Poter’s Five Forces- Haidilao Hotpot Poter’s five forces 1, the bargaining power of suppliers Haidilao Pot has its own four large modern logistics center and a raw material production base, it uses Backward Integration Strategy on its raw material, the company is a large enterprise with national chains in China, the need for raw materials is large, enhance their ability to bargain, recently some vegetables (cabbage, etc. ) oversupply, causing prices to fall, this is good for the company’s business; Shuanghui clenbuterol issue regulations require companies to make safety requirements for food, meat supply is under attack, but also good for the company’s business. It means suppliers has low influence on the company. 2, the bargaining power of buyers Haidilao’s guiding strategy is service differentiation, maximum to meet customers’rationalize requirements. In Haidilao, even waiting for seats can be enjoyable. There are different drinks and kinds of chess on the desk, newest play cards aside and services like nail care for women and shoe care for men available all the time. During dining, you are provided frequently with warm hand towels, a pinafore with ethnic feature, hair string for girls, glass cloth in case that the drop splits to your glasses and a small plastic bag to put your big screen cell phone in. Every waiter and waitress has the right to give you a free meal in particular situation. These uncommon attributes attract more and more interest. ...
Words: 324 - Pages: 2
...Porter’s Five Forces After the analysis of Jetstar’s societal environment with the use of PEST, the Porter’s Five Forces can be used to analyse another aspect of the external environment; the task environment. Porter’s Five Forces is a framework that consists of five competitive forces, threat of entry, power of supplier and buyer, threat of substitution and competitive rivalry. These forces facilitate the analysis of the task environment of an industry or company (Wheelen and Hunger, 2009). The threat of new entry is high because there are no significant barriers of entry in the airline industry. For example, airplanes can be easily leased, defraying the large initial capital investment. Additionally, exit cost in the business is considered to be low as airplanes can be easily sold off or redeployed to other markets (Sundaresan, n.d.). Least to say, business in budget airlines is getting more lucrative with more flyers turning to low fare flights. Thus more airlines are providing low fare flights to meet the demands of flyers. Power of supplier of Jetstar is considered to be low. There are two main inputs to the airline industry; aviation fuel and airplanes. Since aviation fuel is a commodity, which prices are largely determined by the market forces and geo-political forces (Sundaresan, n.d.), it can be said that the suppliers do not have much of a control over the prices put out to Jetstar. With regard to the supply of airplanes, there are currently two manufacturers...
Words: 681 - Pages: 3
...1.0 INTRODUCTION Micheal E. Porter has developed ‘five forces’ model, which this model has been frequently used systematic tool in order to investigate the industry environment. The famous framework of Porter, which is called as five forces model may assists managers to identify threats as well as opportunities by examine the forces of competitive in the competitive environment, with this examination. It illustrates all the five forces of competitive environment. The well-known Porter’s five forces include the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and lastly the intensity of rivalry among competitors in an industry. Capability of a firm to compete in the market will be influenced by each one of these Porter’s forces. This forces help manager to make a decision whether their company should stay in an industry or exit from stay in the industry. In the year of 1866, Nestle which is a company that leading health, wellness, and nutrition in this world today. Henri Nestle is the founder of the Nestle and the headquarters are located in Vevey, Switzerland. There are a number of principles of fundamental, which is guide the strategy of the company. The main concern of Nestle is to come up and give relevant and best products to the new and existing customers that could meet their needs and whenever the customers are. The success of the company can be credited to the profound...
Words: 324 - Pages: 2
...Porter’s Five Competitive Forces Click Link Below To Buy: http://hwaid.com/shop/porters-five-competitive-forces/ A key component of strategic analysis and planning is the assessment of a company’s competitive advantage (referred to by some as competitive position). In the article by Michael Porter, he identifies five potential sources of competitive strength or vulnerability: Existing level of competitive rivalry in the industry Buyer bargaining power Supplier bargaining power Threat of substitute products Threat of new entrants Porter’s Competitive Forces model is an extension of his earlier work on strategy (Porter, M. E., 1996). For this Assignment, use this week's resources and any outside appropriate resources to prepare a competitive analysis for an existing product and complete the following: Imagine that you are asked to provide a presentation on an organization’s competitive advantage to the organization’s board. To choose an organization, you may select your own or one with which you are familiar. Question: Submit a PowerPoint presentation (9–12 slides excluding title and reference slides, consistent with APA guidelines) that examines the competitive advantage of your chosen organization. Include the following: Describe the target market and apparent marketing mix of your chosen organization. Conduct a five forces analysis for the selected organization. Choose a competitor for the selected organization and conduct a five forces analysis for...
Words: 287 - Pages: 2
...Porter's Five Forces Model Porter's five forces analysis is the structure framework for industry analysis and business strategy development. (Porter, M.E. 2008) Using Porter's five forces analysis is a way to figure out the different firms competition levels and force of said "attractiveness" of a market. "Attractiveness" being used in the context of the end all, be all of a industry's profitability. On the other hand, an unattractive industry refers to the combination of all five of the forces acting to drive down the overall profitability. (Porter, M.E. 2008) Three of the five forces of Porters refer to the competition derived from external sources, the remaining two are both internal threats. Porter looked at the forces as the micro environment, that way it would highly contrast against the more commonly known term "macro environment". These forces are close the company and greatly affect the company's ability to serves its customers and make a profit also. If a change were to occur it will normally result in a business having to re-evaluate and re-asses the marketplace to see what overall changes in the company would have to be made to keep up with the market. This however, does not go to say that every firm or company will have the same amount of profit. A company with clear objectives is more likely to achieve a profit over a company with less clear objectives. It comes down to the company's core competences and how the company comes together to work together...
Words: 934 - Pages: 4
...1.0 INTRODUCTION Micheal E. Porter has developed ‘five forces’ model, which this model has been frequently used systematic tool in order to investigate the industry environment. The famous framework of Porter, which is called as five forces model may assists managers to identify threats as well as opportunities by examine the forces of competitive in the competitive environment, with this examination. It illustrates all the five forces of competitive environment. The well-known Porter’s five forces include the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and lastly the intensity of rivalry among competitors in an industry. Capability of a firm to compete in the market will be influenced by each one of these Porter’s forces. This forces help manager to make a decision whether their company should stay in an industry or exit from stay in the industry. In the year of 1866, Nestle which is a company that leading health, wellness, and nutrition in this world today. Henri Nestle is the founder of the Nestle and the headquarters are located in Vevey, Switzerland. There are a number of principles of fundamental, which is guide the strategy of the company. The main concern of Nestle is to come up and give relevant and best products to the new and existing customers that could meet their needs and whenever the customers are. The success of the company can be credited to the profound...
Words: 623 - Pages: 3
...APPENDIX 1 - Porter’s Five Forces Model by 0726335 The analysis of Cosmetic Industry has come out with Poter’s five forves model to analyze the level of rivalry in this industry. In the Porter’s Five Forces Model the rivalry which is in the middle is most powerful of the five compentitive forces. Rivalry among competing firms (High) There are a large number of competitors in this industry, and all competitors are competing for the same customers. Thus Carlina have to compete against its direct competitors that sell similar products. The large number of direct competitors in the industry causes a high degree of rivalry. Competitors are also selling similar products, which is cosmetic product. Due to having so many options, customer is able to switch between brands easily. The industry is in its maturity stage causing the market growth to be static. Thus all companies are striving to maintain its market share in the industry against their competitors. Barriers to enter for new competitors (Moderate) The barriers to enter for new competitors are at a moderate, especially during the maturity stage of the industry’s life cycle. Majority of firms that already existed in the industry have developed economies of scale, thus providing a cost advantage to them over the new entrants. If new companies try to enter into the market, it will face problems especially to cover for the expenditures, as they have not established...
Words: 557 - Pages: 3
...Jake Janjigian SI 422 C1 Kirks 9/16/13 Class #4 – Understanding the Five Forces 1) For each of the Five Forces, the Porter article cites several factors that influence its "strength" (i.e., the amount of downward pressure it exerts on industry profits). For each Force, pick one of these factors, and bring a NEW example from the business world to share in our class discussion. Buyers: In the oil industry, a few large companies control the supply of gasoline in the United States and have generate low buyer power within the industry. Companies like Exxon, BP, Shell, and Lukoil can limit supply and control prices without any complications because demand for their product is so high, there are no widely available substitutes, and their products are undifferentiated. Suppliers: The upstream suppliers in the oil industry, being OPEC, also have a large amount of supplier power because they exert a lot of control on the prices and quantity of oil that is bought by the major players within the industry. Substitutes: There are really no feasible replacements to gasoline in today’s economy. Electrics cars and cars that run on ethanol do exist and are becoming more popular, but gasoline and oil remain as the widespread standard for consumers. As a result of this, oil companies can maintain and manipulate their prices because there is no threat of them being replaced. New Entry: It is extremely costly to enter the oil industry as the major players have become so entrenched and...
Words: 616 - Pages: 3
...Five Forces Analysis Introduction (1) • Devised by Michael Porter • It a framework for the analysis of the structural factors that shape competition within an industry • The five forces: • Determine the profitability of an industry • Assess how attractive and potentially profitable is an industry Introduction (2) • This is a framework for understanding an industry or an organisation’s position with respect to the forces operating in the microenvironment • It can be used to explain the performance of competitors in a market • From the analysis a number of generic competitive strategies can be derived • Cost leadership • Differentiation • Focus The five forces • The ability of firms to earn an good return depends on five forces: namely the… • Threat of new entrants‐ the ability of new competitors to enter the industry • Bargaining power of suppliers • Bargaining power of customers • Threat of substitute products • Degree of competitive rivalry The five forces framework Threat of Substitute Products Bargaining Power of Suppliers Intensity of rivalry within the industry Bargaining Power of Buyers (Customers) Threat of New Entrants The threat of new entrants Threat of new entrants • If new entrants move into an industry they will gain market share, rivalry will accelerate and profits will decline • If it is difficult to enter an industry the position of existing firms will be strengthened • Impediments to the entry of new firms are known as barriers ...
Words: 1809 - Pages: 8
...Lg Porter's Five Forces Analysis Introduction LG is a South Korean company that manufactures mobile phones, as well as other devices such as televisions and home appliances. They also offer Appliances , computer product, solar, LG originally stood for "Lucky Goldstar", but is now promoted as meaning "Life's Good". And LG is the fourth largest mobile phone manufacturer in the world. LG Porter's Five Forces Analysis The Bargaining Power of Buyers The bargaining power of buyers is petty moderate. There aren't many companies have same quality of products as those of LG. They have really high technologically televisions, monitors, notebook PCs. It stand out among existing competitors. Everything from the slim and sleek, it make the products superior to the competing companies. The Bargaining Power of Suppliers LG 's bargaining power of suppliers is very low. The company forms information partnership to create cooperation among supply chain partners for mutual success. It enters into a cooperative relationship with its suppliers by becoming their shareholders. This allows LG to promote strategic relationships with equipment and parts suppliers, which enables a stable source of supply at competitive prices. The result is high-quality parts at a lower cost which is done through sharing product concepts with suppliers early in the product development cycle. Threat of Substitute Products or Services The threat of substitute products is low. Their main production is panel...
Words: 314 - Pages: 2
