BHOR LED TV

7/27/2019 BHOR LED TV

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MICHAEL PORTERS FIVE COMPETITIVE FORCES

ANALYSIS FOR BHOR LED TV

Prepared by:

Name ID

Maksudul Amin 0820215

Imran Ahmed 1330049

Nafis Ahmad 1321743

Md. KhodadadHossain 1231120

TanvirMorshedChowdhury 1211222

Course name : Marketing Management

Course Code : MBA 506

Section : 02

Submission Date : 28/7/2013

Prepared for:

Mr. Mohammed Sohel Islam

Senior LecturerSchool of Business

Independent University Bangladesh


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Introduction

The name of the product is BHOR LED TV. Its abrand new LED TELEVESION SET with so

many attractive features which we think can be a good competitor in Bangladeshi TV set

industry. But before launching the product we must analyze the market situation properly. For

which Michael Porters Five Forces model of Porter could be a very useful tool.

Figure: Michael Porter's Five Forces model of Porter

Introduction of Micheal Porters Five Forces Model

The Five Forces model of Porter is an outside-in business unit strategy tool that is used to make

an analysis of the attractiveness of an industry structure.


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It captures the key elements of industry competition.

1. Intense rivalry among existing players

2. Threat of new entrants

3. Threat of substitute products

4. Bargaining power of Buyers

5. Bargaining power of suppliers

We have searched into the market for information with which the prospect of BHOR LED TV

can be analyzed using MICHEAL PORTERS FIVE FORCES MODEL. The results are shown

here-

Threats of intense segment rivalry

According to MICHEAL PORTERS FIVE FORCES MODEL a market is unattractive when

* When there numerous strong and aggressive competitors already exist

* When the market is stable or declining

* When the fixed costs for establishing the business are high

* When the Exit Barriers are high

* When the competitors have high stakes in staying in the segment

Keeping the features of intense rivalry among existing players in mind, now let us look into

the market situation.

Sony, Toshiba, Samsung, LG are some of the name of foreign companies who are the market

leaders in LED TVs market in Bangladesh. Some local brands like Walton, Konkaetc can also

have a place in that list as the demand for LED TV in Bangladesh is growing very quickly. As


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there are so many competitors, the companies tend to market their product very aggressively.

People watch at least one TV brand advertisement in a day. At the same time because of the

aggressive marketing the market is rising.

The reason is very obvious, the population. As the population is growing day by day and people

have more buying powerso they are able to buy a LED TV.

LED companies import most of their necessary LED TV parts from abroad. Practically they are

only assembling the TV sets in their factories. More companies are intending to invest in this

sector and establish their own plant in Bangladesh. This trend is becoming interesting to the

investors because of low labor cost.

If we the BHOR LED TV company follow this trend and establish our own plant in Bangladesh,

we can also enjoy this advantages. And because of the continuous rising of LED TV market any

investor would like to buy a plant like this. So the exit barrier is high as well. Though fixed cost

for establishing such plant is very high and the competitors have high stakes in staying in the

segment.

Threats of new entrants and entry barriers

Traditionally, large consumer electronics companies like Samsung and Sony enjoyed high

market share within the LED industry by building, developing, and marketing their products in-

house. This system created high barriers to entry and defended against the threat of new

entrants in the industry. As LED technology became increasingly commoditized, the threat of

new entrants into the marketplace increased.

It is not only incumbent rivals that pose a threat to firms in an industry. The possibility that new

firms may enter the industry also affects competition. In theory, any firm should be able to enter

and exit a market, and if free entry and exit exists, then profits always should be nominal. In


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reality, however, industries possess characteristics that protect the high profit levels of firms in

the market and inhibit additional rivals from entering the market. These are barriers to entry.

Barriers to entry arise from several sources:

1) Government creates barriers.

2) Patents and proprietary knowledge serve to restrict entry into an industry.

3) Asset specificity inhibits entry into an industry.

4) Organizational (Internal) Economies of Scale.

BHOR LED TV bargaining power of Threat of new entrants and entry barriers is low. The threat

of new entrants is low in LED technology due to its various entry barriers such as rapidly

evolving technology, capital-intensive characteristics, brand equity, expected retaliation among

existing competitors and the significant investments required by the economies of scale. In

addition, the industry may not be as appealing to potential competitors due to its highly

competitive nature.

Threats of substitute products

According to Michael Porters Five Forces Model a market is unattractive:

* When there is potential substitute for the product.

* When substitute place a limit on prices and profits

* When company has to monitor price trends closely

* If technology advancement or competition increases in the substitute industries

Keeping the features of threat of substitute products in mind, now let us look into the market

situation. The market survey says that LED TV is only a part of Bangladeshi TV set industry.


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There are many cheaper TV sets with backdated technology like CRT. Moreover people are

using their computer monitors as TV set with the help of TV Card.

It is needless to say the popularity of print or radio media in our country if we count Radio sets

and Newspapers as substitute products for TV sets, as the utility to the buyers for these three

media are pretty much same and that is information and entertainment. Moreover, people are

spending more time in front of their computer monitor, for watching movie or listening song or

using internet, than their TV set. So it is safe to say that potential substitutes for BHOR LED TV

are prominently exists.

As most of the people are poor in our country, the amount of the buyers among the total TV set

market in Bangladesh, CRT or less expensive TV sets are the biggest. As the price of LED TV is

reducing gradually because of much technological advancement in TV set industry, the price

range for LED TV is getting narrower day by day. Among many buyers who might buy a LED

TV now intending to spend a little more and buy a LED TV. So, quiet naturally, the price

movement in substitute product significantly affects the price of LED TV market. And obviously

it will also affect LED TV industry if there is any kinds technological advancements occur on

those substitute products industries.

Because of low switching cost customers might buy substitutes product. Customers are losing

brand loyalty because they have plenty of options, there have many other technologies, which

they can buy and the product will serve their needs. BHOR LED TV is not a unique product.

Because of these reasons BHOR LED TV is facing high threats of substitutes products. To

minimize the threats BHOR LED TV can enhance branding and marketing. The company needs

to find out the customers needs and meet those needs efficiently.

Threats of buyers growing bargaining power

The important factors to be considered are-

* When they are concentrated and organized

* When the product is undifferentiated


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* When switching costs for buyer is low

* When buyers are price sensitive

* When buyers can integrate upstream

Keeping the features of Threats of buyers growing bargaining power in mind, now let us look

into the market situation.

Person who are comfortable of spending money for LED TV are mostly senior executives or

businessman with a status of middleclass in Bangladesh.

These senior executives or businessmen with a status of middleclass are usually very

concentrated or organized as they can make regular contacts with each other because of the

nature of their work. As they can contact regularly to each other, they can share their thoughts

towards the product. This makes them conscious or in a sense organized about the product.

Although the buyers are pretty much conscious about the product, practically they dont know

much about the LED TV technology. This grows a tendency of stereotyping all the brands in the

market into them. So it is easy to assume that products are quiet undifferentiated to buyers.

As we previously discussed that the price range for quality LED TV are being narrow day by day

because of the pressure of substitute products and low quality products, the buyers are becoming

very price sensitive as they are very organized these days. At the same time, as the price of

substitute products are very close, switching cost for buyers are becoming low.

Threats ofsuppliers growing bargaining power

The bargaining power of suppliers is also described as the market of inputs. In case of our

products, Suppliers are very important factors. Because we are importing finished products from

my suppliers. Suppliers of raw materials, components, labor, and services (such as expertise) to

the firm can be a source of power over the firm, when there are few substitutes. Suppliers may

refuse to work with the firm, or, e.g., charge excessively high prices for unique resources.

Supplier switching costs relative to firm switching costs
https://en.wikipedia.org/wiki/Firmhttps://en.wikipedia.org/wiki/Firm


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Degree of differentiation of inputs Impact of inputs on cost or differentiation Presence of substitute inputs Supplier competition - ability to forward vertically integrate and cut out the BUYER

Suppliers of an industry are powerful when they control such factor as prices, delivery lead

times, orders, and payment terms. The supplier power in the LED industry is high. Suppliers of

LED TV live in different parts of the world. Our suppliers live in Malaysia, China, Thailand and

Taiwan. We will import LED TV from Malaysia or China. The accessories materials are

available in Thailand and in Taiwan. As we have many suppliers in those countries and our

suppliers have many customers so it will be difficult to negotiate with them. In order for the

companies to have a finished product the suppliers could impose a payment term that raises the

cost of resources, which makes the suppliers of LED TV some-what dominant. As I said earlier,

our suppliers have many customers so they are all independent supplier that means they can live

without us. And it is difficult for a company in the LED market to switch from one supplier to

another supplier and the cost of doing so is significant. It is imaginable that importing from

Malaysia and importing from China have different cost settings. Finally the substitute raw mat

for input is very low in LED. We use remote control and that control has a micro cheap. There is

no substitute for micro cheap and no replacement for substitute material.


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Recommendations:

We will present some recommendation for BHOR LED TV. We think that if we can apply

these strategies then will be able to run our business quite nicely. The strategies are-

1. INCREASE CUSTOMER LOYALTY: The first and foremost mantra for every businessis to increase customer loyalty. Loyalty does not build in a day. It needs good marketing

efforts and promotional tools to build a sustainable loyalty. Advertisement including

printed and non-printed (TV ads, radio ads etc.) discounts and other promotional

activities should be implemented.

2. PARTNERSHIP: Partnership is connecting with customers by inviting them in themanufacturing process. We will know what customers want and according to demand we

will import such products if available.

3. GOOD PRICING STRATEGY: One of the major concerns of the buyers. As we are newentrant, so we will go for competitive pricing. It is a method of setting price lower than

that offered by the competitors.

4.

INCREASE VALUE OF THE PRODUCT: Now-a-days, products have multi usingfacilities. People may buy for not the core product but to use the added value. For

example, WebTV where watching TV and web surfing can be done simultaneously.

5. ADOPT NEW TECHNOLOGIES: People are hungry for new technologies. They willtake any technology that can fulfill their demand. So we will look for new technology

available for our products.


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References:

1. www.google.com2. https://en.wikipedia.org/wiki/Porter_five_forces_analysis3. http://www.businessdictionary.com/definition/competitive-price.html4. www.sony.com.
http://www.google.com/http://www.google.com/https://en.wikipedia.org/wiki/Porter_five_forces_analysishttps://en.wikipedia.org/wiki/Porter_five_forces_analysishttp://www.businessdictionary.com/definition/competitive-price.htmlhttp://www.businessdictionary.com/definition/competitive-price.htmlhttp://www.sony.com/http://www.sony.com/http://www.sony.com/http://www.businessdictionary.com/definition/competitive-price.htmlhttps://en.wikipedia.org/wiki/Porter_five_forces_analysishttp://www.google.com/

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BHOR LED TV