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PORTER’S 5 FORCES

MODEL

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RETAILING INDUSTRY

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THREAT OF NEW ENTRANTS • Independent retailers decreased. • Chain stores • Centralized buying competitive advantage

THREAT OF SUBSTITUTES • Deal with various products. • Chances of shifting is high.

POWER OF SUPPLIERS • Historically, exploit the relationship. • Less power

POWER OF BUYERS • Lower bargaining power • High quality products – retailers’ honest

RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Cut throat Competition • Reduce – frequent fliers, memberships, loyalty cards, etc..

TELECOMMUNICATION INDUSTRY

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THREAT OF NEW ENTRANTS • Ownership of a telecom license • Finance

THREAT OF SUBSTITUTES • Cable TV – direct lines, broadband services

POWER OF SUPPLIERS • Less power • Talented managers & engineers

POWER OF BUYERS • Increased choice – high bargaining power • Switching costs – individual & large business customers.

RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Usage of phone, competition is high • Price • Value added services • Profitability low

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Airline Industry

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THREAT OF NEW ENTRANTS • Saturated Market • Brand Name & Recognition

THREAT OF SUBSTITUTES • Time, Money • Personal References & convenience

POWER OF SUPPLIERS • Dominated – Boeing & Airbus • Not much of difference.

POWER OF BUYERS • Low bargaining • Consider Service of airline too.

RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • High competition • Cut throat competition • Low Profitability

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Pharma Industry

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THREAT OF NEW ENTRANTS • Very low barriers to entry

• Government policies supportive

• Entry price regulation exists

• Economies of scale exist

• Proprietary technology

• Product existence

THREATS OF SUBSTITUTES • No substitutes for the medicines

• Biotechnology is a threat to synthetic pharma products

POWER OF SUPPLIERS • Volume benefits occur

• Inputs standard, available locally

• Numerous suppliers-switching cost low

• Suppliers can go for forward integration

• Raw material cost constitute more than 50% of the total expenses

POWER OF BUYERS • End consumers do not have bargaining power

• Brand identity exists but is in the hands of Influencer (Doctors)

• Price Sensitivity is less

• Highly fragmented market, so buyer concentration v/s industry is low

RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Industry Competition

• Highly competitive.

• Top five players have mere 18% market share

• 18% market share

• Lower fixed cost and high working capital

Indian Automobile Industry

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THREAT OF NEW ENTRANTS

• Substantial entry

• New company requires high capital.

• Achieving minimum efficient scale is prohibitive

• Enter through strategic partnership, buying, merging

• Domestic market works well locally than globally

THREAT OF SUBSTITUTES • Fairly mild

• Other forms of transportation available

POWER OF SUPPLIERS • the power axis is tipped in industry

• Powerful buyers dictate their terms to supplier

POWER OF BUYERS • The power axis is tipped in the consumers’ favor

• Low switching costs from among competing brands.

RIVARLY AMONG EXISTING FIRMS WITHIN AN INDUSTRY • Intense due to the entry of foreign companies

• Rivalry - high with any product being matched in a few months by the competitors

• Technical capabilities

• Collaboration with international players

THANK YOU

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