5 Forces
Strategic Management
Critical Essay Assignment 1
In this essay, the Porter’s five forces theory is used to analysis the industry structure. These five forces are Intensity of rivalry within the industry, Threat of substitute products, Bargaining Power of Buyers, Bargaining Power of Suppliers and Threat of New Entrants. Through them, it will know the industries profitability whether is high or low. Based on Australia’s industry, Mining and retail are the industries I chose to analysis.
High Profit Industry- Mining Industry
Australia’s mining industry has earned Au$84 billion of profit before tax in 2010-2011. It increase 32.4% compare with 2009-2010. It is the largest contributor to support Australia’s GDP. (Australian Bureau of Statistic2012) The amount of industry rivalry will be relative low if the industry is growing rapid. (Hubbard, G & Beamish, P 2011, p.78)On the other hand, all of the mining company around the world has their special commodities. So the product differences will be happened between different providers. For instance, BHP Billiton is refined in mineral exploration and production, and Rio Tinto Alcan is refined in aluminum smelting, technology sales and service, engineering services, smelting equipment sales and smelting equipment sales, and smelting consumables production. Because they have their specific product, so the industry rivalry will become low. As BHP Billiton is the world’s top mining company around the world. It can provide a very strong identify of the mining company. To the rivalry company, it is a strong competitor which they cannot fight down. Therefore, it is also low of industry rivalry. Overall, mining industry in Australia is at the mature and stable market and the intensity of industry rivalry is low. (Market Line, 2012)
In the mining industry, absolutely there are some different of materials can be substitutes by others. However, just a few buyers will replace metal with these alternatives, because they do not
Critical Essay Assignment 1
In this essay, the Porter’s five forces theory is used to analysis the industry structure. These five forces are Intensity of rivalry within the industry, Threat of substitute products, Bargaining Power of Buyers, Bargaining Power of Suppliers and Threat of New Entrants. Through them, it will know the industries profitability whether is high or low. Based on Australia’s industry, Mining and retail are the industries I chose to analysis.
High Profit Industry- Mining Industry
Australia’s mining industry has earned Au$84 billion of profit before tax in 2010-2011. It increase 32.4% compare with 2009-2010. It is the largest contributor to support Australia’s GDP. (Australian Bureau of Statistic2012) The amount of industry rivalry will be relative low if the industry is growing rapid. (Hubbard, G & Beamish, P 2011, p.78)On the other hand, all of the mining company around the world has their special commodities. So the product differences will be happened between different providers. For instance, BHP Billiton is refined in mineral exploration and production, and Rio Tinto Alcan is refined in aluminum smelting, technology sales and service, engineering services, smelting equipment sales and smelting equipment sales, and smelting consumables production. Because they have their specific product, so the industry rivalry will become low. As BHP Billiton is the world’s top mining company around the world. It can provide a very strong identify of the mining company. To the rivalry company, it is a strong competitor which they cannot fight down. Therefore, it is also low of industry rivalry. Overall, mining industry in Australia is at the mature and stable market and the intensity of industry rivalry is low. (Market Line, 2012)
In the mining industry, absolutely there are some different of materials can be substitutes by others. However, just a few buyers will replace metal with these alternatives, because they do not