Fertilizer Industry Analysis
MICHAEL PORTERS’ FIVE FORCES MODEL OF FERTILIZER INDUSTRY
Submitted by: Charushila Satish Bankar
Roll no.: 0125
Div: A
INTRODUCTION TO FERTILIZER INDUSTRY: Today, Indian Fertilizer Industry is developing in terms of technology. Indian manufacturers are adopting advanced manufacturing processes to prepare innovative new products for Indian agriculture. India has entitled as the third largest producer and exporter of nitrogenous fertilizer. The tremendous demand of fertilizers has led the country to invest huge in the public, co-operative and in private sectors. At present, India has more than 63 large sized plants of fertilizers, manufacturing wide assortment of fertilizers including nitrogenous, phosphatic, Ammonium Sulphate (AS), Calcium Ammonium Nitrate (CAN) urea, DAP and complex fertilizers. Apart from it, there are other 64 small and medium scale Indian manufacturers producing fertilizers.
MICHAIL PORTES FIVE FORCES MODEL :
Mchail Porter has putforth the model to analyse the industry on the basis of five factors which are common to all industries.
The analysis of fertilizer industry on the basis of this model is explained further.
THREAT OF NEW ENTRANTS:- LOW
Entry barriers are high. 1. Supply side economies of scale- Present fertilizer industries both public and private sector enjoy the benefit of scale economies of scale. The cost per unit is low. 2. Demand side benefits of scale-the buyers i.e. farmers are having faith on the fertilizers they are using. They communicate to each other the results of fertilizers. Hence always has tendancy to buy what others are buying. Hence for new entrant it is difficult to break this attachment. 3. Customer switching costs- It is high. When farmers are using any fertilizer,they are well known about the results, also for that fertilizers they have tie up with the o-operative societies, they can get it on credit basis also. Hence the cost of
Submitted by: Charushila Satish Bankar
Roll no.: 0125
Div: A
INTRODUCTION TO FERTILIZER INDUSTRY: Today, Indian Fertilizer Industry is developing in terms of technology. Indian manufacturers are adopting advanced manufacturing processes to prepare innovative new products for Indian agriculture. India has entitled as the third largest producer and exporter of nitrogenous fertilizer. The tremendous demand of fertilizers has led the country to invest huge in the public, co-operative and in private sectors. At present, India has more than 63 large sized plants of fertilizers, manufacturing wide assortment of fertilizers including nitrogenous, phosphatic, Ammonium Sulphate (AS), Calcium Ammonium Nitrate (CAN) urea, DAP and complex fertilizers. Apart from it, there are other 64 small and medium scale Indian manufacturers producing fertilizers.
MICHAIL PORTES FIVE FORCES MODEL :
Mchail Porter has putforth the model to analyse the industry on the basis of five factors which are common to all industries.
The analysis of fertilizer industry on the basis of this model is explained further.
THREAT OF NEW ENTRANTS:- LOW
Entry barriers are high. 1. Supply side economies of scale- Present fertilizer industries both public and private sector enjoy the benefit of scale economies of scale. The cost per unit is low. 2. Demand side benefits of scale-the buyers i.e. farmers are having faith on the fertilizers they are using. They communicate to each other the results of fertilizers. Hence always has tendancy to buy what others are buying. Hence for new entrant it is difficult to break this attachment. 3. Customer switching costs- It is high. When farmers are using any fertilizer,they are well known about the results, also for that fertilizers they have tie up with the o-operative societies, they can get it on credit basis also. Hence the cost of