Premium Essay

Mba Porters Forces

In: Business and Management

Submitted By Johan1992
Words 1456
Pages 6
Johan Basson
2457167
CCMM 516
Assignment 1

QUESTION 1
1.1 Introduction
Porter's competitive forces model utilises five legs or better known as competitive forces to determine the market position of a company or a certain line of business.
These five legs will be briefly mentioned and discussed below and will then be applied on the NBA to determine its current position.
1.2 Entry barriers
The first competitive force is the threat of new entrants, or also known as entry barriers, this analyses the market and then determines how easy it is for new businesses or companies to enter and thrive in the industry.
The reason for this is that the more companies enter a market, the less market share each company will have in a business. This means that the market will become less profitable and less attractive.
Things that influence the entry barriers include economic considerations like capital required and the economy and also in general legislation and rules and regulations limiting the entry into a certain market.
1.3 Threat of substitutes
The second competitive force is the threat of substitute products or services. This means that if it is a product that is easily made or obtained and it has no registered patents over it, that it would easily be substituted by a similar or same product. It also refers to the uniqueness of a product and how easily a similar product or a different product with the same goal may be manufactured.
If it is easily substituted it weakens the market share and therefore renders the market less profitable.
1.4 Rivalry
The third competitive force is that of the intensity of competitive rivalry in the market. This refers to the amount and size (Or market share) of competitors.
When there are more and bigger competitors to compete with it decreases the market share and therefor leaves the market less profitable.
1.5 The bargaining…...

Similar Documents

Premium Essay

Porters Five Forces

...Porter’s Five Forces Model Porter’s Five Forces is an economic model used to characterise industries and markets, and combine to make up the business environment. Porter explains that by studying the structure and underlying dynamics between these forces, Nokia can discover opportunities for improving their marketing strategies, along with determining the industry attractiveness, competitiveness and long-run industry profitability. These five forces are also known as "competitive forces". Michael Porter has identified five forces that are widely used to assess the structure of any industry, along with evaluating what drives competition. Porter’s five forces are: 1. Existing Competitive Rivalry 2. Potential New Entrants 3. Threat of Substitutes 4. Bargaining Power of Suppliers 5. Bargaining Power of Customers Existing Competitive Rivalry The most common and direct threat to a business or organisation is through their rivals and competitors. This usually occurs in a market that sells the same product or offers similar facilities and services, to a population of the same customer base. Overall, general markets are known and seen to be more competitive. The more firms that will operate in the markets the easier it will be for the customers to shop around. Even a minority of firms can dominate a market, for example, supermarkets; even they can cause intense competition. For example, “some forms of competition, such as price competition, are highly......

Words: 648 - Pages: 3

Premium Essay

Apple Porters 5 Forces

...13/11/13 at 3pm on StudyNet and in Coursework Hand-In point Weighting: 30% Title: Marketing Audit Format: Report Type: Group (approx 4-5 members) Select one of the following organisations and familiarise yourself with the relevant organisation website * Apple Inc www.apple.com CONSUMER ELECTRONICS * Tiffany’s & Co www.tiffanys.co.uk LUXURY RETAIL 1. Write a brief overview of the organization Access the relevant industry Mintel /Keynote report and other relevant research from information databases 2. Identify and illustrate the SBU’s (Strategic Business Units) for the organization External Environment 3. Apply PESTEL to the chosen industry. Illustrate and provide detailed explanations 4. Apply Porters 5 Forces to the relevant industry /organization /sector. Illustrate and provide detailed explanations 5. Illustrate in a grid format: Opportunities and Threats Internal Environment 6. Apply McKinsey’s 7S matrix to the organization /sector 7. Apply Marketing mix to the organisation /sector 8. Illustrate in a grid format: Strengths and Weaknesses SWOT Analysis 9. Illustrate in a grid format: corporate SWOT Analysis 10. Illustrate in a grid format: SBU SWOT Analysis (For Apple choose ipad and for Tiffany’s choose Jewellery Strategic Positioning 11. Identify competitors for Apple or Tiffany’s and using a perceptual map with appropriate axes demonstrate a gap in the market 12. Identify an appropriate......

Words: 1792 - Pages: 8

Premium Essay

Porter Five Forces

...Porter's Five Forces Model: analysing industry structure Author: Jim Riley Last updated: Sunday 23 September, 2012 Overview of the Five Forces Model Porter identified five factors that act together to determine the nature of competition within an industry. These are the: Threat of new entrants to a market Bargaining power of suppliers Bargaining power of customers (“buyers”) Threat of substitute products Degree of competitive rivalry He identified that high or low industry profits (e.g. soft drinks v airlines) are associated with the following characteristics: Let’s look at each one of the five forces in a little more detail to explain how they work. Threat of new entrants to an industry If new entrants move into an industry they will gain market share & rivalry will intensify The position of existing firms is stronger if there are barriers to entering the market If barriers to entry are low then the threat of new entrants will be high, and vice versa Barriers to entry are, therefore, very important in determining the threat of new entrants. An industry can have one or more barriers. The following are common examples of successful barriers: Barrier Investment cost Notes High cost will deter entry High capital requirements might mean that only large businesses can compete Lower unit costs make it difficult for smaller newcomers to break into the market and compete effectively Each restriction can act as a barrier to entry E.g. patents provide the patent holder with......

Words: 1260 - Pages: 6

Premium Essay

Porters Five Force

...What is it? Framework/theory Porter's Five Forces of Competitive Position Analysis were developed in 1979 by Michael E Porter of Harvard Business School as a simple framework for assessing and evaluating the competitive strength and position of a business organisation. This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. Porter’s five forces help to identify where power lies in a business situation. This is useful both in understanding the strength of an organisation’s current competitive position, and the strength of a position that an organisation may look to move into. Strategic analysts often use Porter’s five forces to understand whether new products or services are potentially profitable. By understanding where power lies, the theory can also be used to identify areas of strength, to improve weaknesses and to avoid mistakes. Porter’s five forces of competitive position analysis: The five forces are: 1. Supplier power. An assessment of how easy it is for suppliers to drive up prices. This is driven by the: number of suppliers of each essential input; uniqueness of their product or service; relative size and strength of the supplier; and cost of switching from one supplier to another. 2. Buyer power. An assessment of how easy it is for buyers to drive prices down. This is driven by the: number of buyers in the market; importance of each individual buyer to the organisation; and......

Words: 790 - Pages: 4

Premium Essay

Porters Five Forces

...Introduction: In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E. Porter. It was his first HBR article, and it started a revolution in the strategy field. In subsequent decades, Porter has brought his signature economic rigor to the study of competitive strategy for corporations, regions, nations, and, more recently, health care and philanthropy. “Porter’s five forces” have shaped a generation of academic research and business practice. With prodding and assistance from Harvard Business School Professor Jan ‘ Rivkin and longtime colleague Joan Magretta, Porter here reaffirms, up-dates, and extends the classic work. He also ad-dresses common misunderstandings, provides practical guidance for users of the framework, and offers a deeper view of its implications for strategy today. In essence, the job of the strategist is to understand and cope with competition. Often, however, managers define competition too narrowly, as if it occurred only among today’s direct competitors. Yet competition for profits goes beyond established industry rivals to include four other competitive forces as well customers, suppliers, potential entrants, and substitute products. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry. As different from one another as industries might appear on the surface, the underlying...

Words: 11910 - Pages: 48

Premium Essay

Porter 5 Forces

...well about what customers needs, and who it is the customers see the firm will competing with. Porter (1980) said that “the first step in structural analysis is an assessment of the competitive environment – the basic competitive forces and the strength of each in shaping industry structure. The second is an assessment of the company's own strategy-of how well it has positioned itself to prosper in this environment.” When these two are taken together, these two will be the key factors to forecasting a company earning power. 2. Literature Review 2.1 The theory of Porter's five forces The successful of a company's competitive strategy depends on how it relates to its external environment and how well they prepare for it. In the contrast, a company who does not prepare well is ill equipped to deal with a competitive marketplace (Bennett & Blythe, 2002), therefore, company should know well about the advantage of competitive on the market, and what problems they will face in the future. The environment must be viewed each forces which have influence the company, including the products and services (Vignali&Vignali, 2009) when the company face these problems what strategy will they use to flight back; from external environment to understand the advantage of the competitive market in order to plan and build itself strategy, this thinking are from outside-in (Porter, 1980 and Mintzberg et al, 1998). 1 Vignali & Vignali(2009) indicate that the company......

Words: 2007 - Pages: 9

Premium Essay

Porters Five Forces

...Porter’s Five forces and SWOT analysis on Breadtalk in Singapore Introduction BreadTalk Group Limited is a bakery in Singapore and was founded in the year 2000, like any other business Breadtalk is in regular pressure to improve their levels of performance and efficiency, with this in mind, this essay shall give a comprehensive study of diverse aspects that have made it possible for Breadtalk to stay gainful despite the critical business environment. This shall be achieved by performing a comprehensive Strength, weakness, Opportunity and Threat (SWOT) analysis and Porters Five forces analysis. SWOT analysis Strength The concept of Breadtalk is exclusive and inventive and this differentiates the brand from usual bakeries in the market. Breadtalk has standardized the design across all branches and is widely recognized for its attractive and eye-catching layout. Breadtalk vends a large range of buns, bread, pastries and cakes which is a very unique concept from the traditional bakeries in the market; every retail channel of Breadtalk presents about 40 to 60 special items day by day. (Ball, 2012) The Breadtalk group has a chain of approx 40 retail outlets island-wide in Singapore, it has existence in countries like Kuwait, Oman, Jordan, Saudi Arabia, India and Bahrain and thus it has captured strong market interest, which has helped in increasing its brand awareness. Weakness Breadtalk products are priced slightly higher than the products of other bakers, which might...

Words: 306 - Pages: 2

Premium Essay

Five Forces of Porter

...The five Forces Competing for profits The term competence is not about to beat your enemy with a profit. But compete for a profit is more complicated than it seems. Is not just compete with your enemy but with other participants involved as customers, who jostle for good quality products at a good price. Compete with suppliers who prefer to be paid better and deliver fewer products and compete with producers who could replace at any time. 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 you understand both the strength of your current competitive position, and the strength of a position you're considering moving into. With a clear understanding of where power lies, you 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 your 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. These five forcers, the intensity of rivalry among existing competitors, the bargaining power of buyers (the industry’s customers), the bargaining power of suppliers, the threat of substitutes, and the threat of new entrants determine the industry’s structure. Before Porter, the prevailing framework for......

Words: 324 - Pages: 2

Premium Essay

Ibm and Porter Five Forces

...IBM and Porter’s Five Competitive Forces Alexis DiOrrio September 21, 2015 Wilmington University History and Financial Analysis IBM or International Business Machines is a well-known American Computer manufacturer, founded by Thomas J. Watson (Bellis, 2015). They are also known as the “Big Blue” after the color of its logo. The company has manufactured everything from mainframes to personal computers and has been extremely successful selling business computers (Bellis, 2015). What started the beginning of IBM’s history, was on June 16, 1911 when three successful companies merged together; The Tabulating Machine Company, The International Time Recording Company, and The Computing Scale Company of America. These three companies joined together and formed one company, The Computing Tabulating Recording Company. In 1924, Watson changed the company’s name to what we know today as IBM (Bellis, 2015). IBM began manufacturing calculators in the 1930s, using the technology of their own punch card processing equipment. The financed the invention of the Mark 1 Computer with Harvard University in 1944. By 1953, IBM was ready to produce their own computers, which began with the IBM 701 EDPM, which was their first commercially successful general-purpose computer (Bellis, 2015). In 1980, Bill Gates agreed to create an operating system for IBM’s computer for the home consumer. Once IBM had now stepped into the home consumer market it sparked the computer revolution. Below...

Words: 1366 - Pages: 6

Premium Essay

Porter Five Force

...Porter’s Five Forces Analyses Threat of New Entrants - Low According to Porter (1985), potential competitors in any market are faced with challenges that new entrants often have including sales channels, costs of conversion and funding needs. (Dr. Antony Michail, 2011) Throughout the recession Tesco has continued to invest into expanding the company and developing efficiencies, making it as competitive as ever to defend against the threat of new entrants (Datamonitor, 2010).The threat of a new competitor entering this sector is relatively low, due to the huge capital investment required to be competitive and establish a brand identity that stands out. Tesco and other large supermarket are able to purchase large volumes of goods in lower price. In contrast, smaller new entry companies are more likely to buy smaller volumes at higher prices. New firms also have to be aware that Tesco already have loyalty customers. All of which helps to protect them from the threat of new competitors. Therefore, the successful entry of new threats is minimal. Threat of New Substitutes products or services - High According to Porter (1985), the threat of substitute products and services offered by an organization depends on propensity of the buyer to substitute, switching cost that the buyer will incur, perceived product or service differentiation level, the number of substitute products or services in the market ease of substitution and quality depreciation among other factors. (Dr. Antony...

Words: 1107 - Pages: 5

Premium Essay

Porter 5 Forces Tesla

...After several downturns of the gas-fuelled automobiles market some caused by the 2009 financial crisis in US and the instability of the oil price, the automobile industry has been looking forward to develop new energy powered vehicles. This is the case of the British automaker Aston Martin, in recent days, has announced the deal with the Chinese firm LeTV to develop electric cars and bring them to the market by 2018. Through this initiative, both firms are vying against Tesla luxury car segment where is the forerunner of the new-energy vehicles marker. In this essay, the Porter Five Forces framework will be analysed on the electric vehicle market. The emerging market of Electric Vehicles, in the start-up stage of the industry lifecycle, is capturing the attention of automakers prompting a strong rivalry between incumbents namely Nissan, General Motors, and allowing the entrance to new comers such as Tesla that is now heading the market with a clear differentiated position in the industry. The attractiveness of the electric vehicle market has been catching the attention of the already positioned luxury automakers, for example, Daimler's Mercedes-Benz, Volkswagen's, Porsche and Audi, but also new comers such as Tesla, this last one, with a strong automobile positioned as current market leader on electric vehicles. To tackle Tesla’s strategy, Aston Martin recently signed a deal with a Chinese tech company LeCo (formerly LeTV) to develop an all-electric car, model RapidE, to...

Words: 1135 - Pages: 5

Premium Essay

Porters Five Forces

...strategy, Porter's five-forces model looks at the strength of five distinct competitive forces, which, when taken together, determine long-term profitability and competition. Porter's work has had a greater influence on business strategy than any other theory in the last half of the twentieth century, and his more recent work may have a similar impact on global competition. Michigan native Michael Porter was born in 1947, was educated at Princeton, and earned an MBA (1971) and Ph.D. (1973) from Harvard. He was promoted to full professor at Harvard at age 34 and is currently C. Roland Christensen Professor of Business Administration at the Harvard Business School. He has published numerous books and articles, the first Interbrand Choice, Strategy and Bilateral Market Power, appearing in 1976. His best known and most widely used and referenced books are Competitive Strategy (1980) and Competitive Advantage (1985). Competitive Strategy revolutionized contemporary approaches to business strategy through application of the five-forces model. In Competitive Advantage, Porter further developed his strategy concepts to include the creation of a sustainable advantage. His other model, the value chain model, centers on product added value. Porter's work is widely read by business strategists around the world as well as business students. Any MBA student recognizes his name as one of the icons of business literature. The Strategic Management Society named Porter the most important......

Words: 273 - Pages: 2

Premium Essay

Porters 5 Forces

...Supermarket Industry Porters 5 Force’s Porter (1980) illustrates in this analytical tool 5 variables that determine the attractiveness of an industry for organisations in terms of profitability in their immediate environment. Using the forces in this model we can analyse how attractive the UK Supermarket industry is to enter, the 5 forces are as follows. The threat of potential new entrants Barriers to entry in the UK supermarket industry relies on the entrants capability of matching capital requirements of existing firms, the UK supermarket industry is dominated by firms known as Tesco, Asda, Sainsbury’s and Morrison’s (Big 4) owing up to 69% of market share in the UK. Looking at the experience curve (1960: Boston Consultancy Group) A new entrant would have to achieve the economies of scale needed to achieve cost parity with the big 4 and compete on cost advantage. In the supermarket industry achieving economies of scale is not on production but other factors such as efficiency, pricing, range of goods and value of products. Tesco for example have very low cost margins in comparison to the scale of their operations and distribution channels but they are able to achieve high sales because the convenience, range of products and different services they offer. Product differentiation is another barrier to entry, a new entrant would need to achieve and individual level of differentiation and attain an identity through promotions and costly advertising, total......

Words: 1807 - Pages: 8

Free Essay

Porter Forces

...5 Forças de Porter – Caso prático Hotel_Agencia PODER NEGOCIAL DOS CLIENTES (agencia) Um grande volume de vendas é canalizado para um número reduzido de clientes (Just.: número de produtos a serem vendidos é maior que número de potenciais compradores) Os clientes têm um grande número de alternativas onde efectuar as suas compras (Just.: existem outros balcões e meios online de concorrência ) Os produtos que vendemos representam uma parte significativa nos custos dos clientes (Just.: verifica-se, hoje em dia, um grande gasto em turismo e actividades de lazer, fazendo com que potenciais clientes pernoitem no destino) Os clientes têm grande facilidade em trocar de fornecedor (Just.: Devido ao elevado número da concorrência, balcões e online) Os clientes têm grande informação sobre os produtos que vendemos (Just.: o consumidor, hoje em dia, está muito bem informado e o acesso às informações é cada vez mais “acessível”) Os clientes são muito infiéis (just.: o fácil acesso às informações, leva ao consumidor ser mais confiante a mudar de local de compra, que posteriormente leva à perda na fidelização do mesmo face a um produto ou fornecedor De 20 a 24 Pontos - O poder negocial é inteiramente dos clientes. De 13 a 19 Pontos - O poder negocial é equilibrado. 4 - inteiramente aplicável 3 - aplicável 2 - aplicável por vezes 1 - inteiramente......

Words: 1117 - Pages: 5

Premium Essay

Porters 5 Forces

...Nakia Hart MBA 640 Dr. Turnquist Porters 5 forces Analysis of Casino Industry Internal Rivalry (High significance) In Las Vegas, the casino-resort market has become hyper-competitive, especially since all of the hotel-casinos rely heavily on room revenues and convention guests. Currently, the supply of hotel rooms far outweighs the demand for them, pushing room rates down to unprofitable levels. Entry and Exit (High significance) Entry and exit forces are probably the most restricting aspects of the competitive landscape in the casino-resort industry. The casino-resort industry is highly regulated and highly taxed. Government officials play a crucial role in the success or failure of casino-resorts. It is impossible to enter the industry without a gaming license and, in some cases, a land concession. Buyer Power (Moderate significance) As evidenced by the Las Vegas market, buyers have some power in the casino-resort industry and are capable of exerting downward pressure on room rates. Furthermore, buyer preferences are considered in determining attractions and other amenities, such as entertainment shows and restaurants. Every casino-resort company is constantly trying to out-do its competitors with new developments and offerings. Supplier Power (Low significance) Suppliers in the casino-resort industry have extremely limited power, as they reside in a highly competitive market place in which price is determined by supply and demand. Obtaining......

Words: 369 - Pages: 2