Preview

Porters Five Forces Model

Good Essays
Open Document
Open Document
1058 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Porters Five Forces Model
[pic]
Question:
Use Porters Five Forces Model to analyse your industry.

Answer:
Threat of new entrants
In most industries, and especially in the Electrical Transformer industry, a new company cannot enter the market at an equal level with those of already established companies due to the number of barriers that exist, that will prevent them entering on equal grounds, some of these are as follows,
· The cost of a new company staring up would be so large due to the large amount of new technologies, research and development and qualified staff that an established company would have at their disposal.
· Most of the customers in our market, would be consider to be loyal due the number of years that we have been doing business with them. A lot of the larger companies would be tied into lengthy contracts, spread over the next three / four years, for them to breach these contracts, they would be obliged to pay large fines and lengthy penalties
· Both Vendors and Customers our based in mainland Europe so new law’s restricting both weight of loads and number of hour’s truck drivers can travel will weaken global company compared to European rivalries.
· Most of our existing competitors are well established with a very good customer service and long term contracts, thus leaving it difficult to mussel in on there business.
· New companies are however appearing all the time from all around the world offering larger discounts than any of the companies in Europe can, they can offer these large discounts due to a number of different reasons, the cost of labour is significantly lower than what it would be in Ireland or Europe. The cost of energy, land, infrastructure all help these companies to manufacture at such a low price. The local Governments allowing the exploitation of the work force, child labour, poor conditions etc.
· Alternatively for some of the larger Organisation in the world that have large amounts of finances to back them

You May Also Find These Documents Helpful

  • Better Essays

    • Two forces in particular: risk of entry by potential competitors & rivalry among existing firms…

    • 1897 Words
    • 8 Pages
    Better Essays
  • Good Essays

    Mktg 303

    • 1047 Words
    • 5 Pages

    -their customers are locked into relationships with them; highly specialised investment leads to high switching costs…

    • 1047 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Lululemon Case Study

    • 948 Words
    • 4 Pages

    Threat of New Entrants: is low because of high hurdles of entry. The industry is categorized by large capital requests, access to distribution channels, large economies of scale and product distinction. New entrants will require spending a lot of time and money to come in to the market, increase cost advantage, and establish loyal customer base.…

    • 948 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    competition in the industry. The risk is, for how long they can leverage on their existing…

    • 265 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    John Lewis

    • 2057 Words
    • 9 Pages

    The managers face such tasks as identifying analysing competitive forces. Michael Porter’s model known as five forces model helps managers with their analyses. His model focuses on such forces as the risk of entry by potential competitors, the new market entrants, and the bargaining power of customers, the bargaining power of suppliers, and the closeness of substitutes to an industry’s products. According to Charles Hill and Gareth R. Jones “the task facing managers is to recognise how changes in the five forces give rise to new opportunities and threats and to formulate appropriate strategic responses; In addition, it is possible for a company, through its choice of strategy, to alter the strength of one or more of the five forces to its advantage” (2009).…

    • 2057 Words
    • 9 Pages
    Best Essays
  • Good Essays

    CHIPOTLE

    • 1060 Words
    • 5 Pages

    Threat of new entrants are favourable because the general industry requires high capital and experience. New…

    • 1060 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Thomas and Maurice (2010) describe various potential issues that can serve as barriers to entry into a particular market. A strong barrier to entry makes it difficult for a new company to enter into a market to compete against existing companies and produce a substitute product. The potential barriers are barriers from economies of scale, governmental or legal barriers, barriers of essential inputs, brand loyalties and consumer lock-in (Thomas & Maurice, 2010).…

    • 467 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    | High entry barrier to the industry because of large economy of scale, high CAPEX, and dominating market shares of big players…

    • 1943 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Other firms may be able to produce the good or service but choose not to enter the market or are barred from it.…

    • 681 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Porter Airlines

    • 2655 Words
    • 11 Pages

    Threat of New Entrants - The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include:…

    • 2655 Words
    • 11 Pages
    Good Essays
  • Good Essays

    There are several barriers to entry which help an existing leading firm earn positive economic profits in imperfectly competitive market structures. These barriers are: the financial burden of non-price competition, legal barriers, economies of scale, and the large expenditure for capital to enter certain industries. A firm that wishes to enter into an imperfectly competitive market must bear the cost of differentiating its product or service from that of the existing firms. This includes switching costs for technological products or services like smart phones, software, or websites. Consumers have to learn how to use the new product which can be a deterrent to them switching products. Once a product is differentiated, the new firm must then engage in more non-price competition and advertise for consumer awareness. Marketing and advertising be of great cost to a new firm especially when they are competing against existing leading firms. Legal barriers such as patents, licenses, and copyrights can protect the holder from competitors. These barriers are commonplace in the electronics, publishing, engineering, and pharmaceutical industries. They prohibit a new firm from producing, using, selling, or copying the product or invention. In some industries, simply the fact that a firm is large will give it the advantage of economy of scale allowing for efficient, low-cost production. Over time that firm will see a declining average total cost. New, smaller firms will not be able to realize those economies therefore will not realize significant profits. Another barrier to entry for new firms is the large capital expenditure required to obtain necessary plants and equipment for a product. Industries like aluminum and diamonds are examples of markets which have large capital requirements for entry.…

    • 484 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Baldwin Bicyle Case

    • 572 Words
    • 2 Pages

    Barriers to entry such as the regulation of governments, price competition, firms need to be in big scale in order to lower costs, highly competitive.…

    • 572 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Dr Pepper Analysis

    • 1491 Words
    • 6 Pages

    This creates strong dependence on the competitors for the company to prosper, which limits their competitive…

    • 1491 Words
    • 6 Pages
    Good Essays
  • Good Essays

    The start up capital costs of developing technology in water filtration industry are large enough to dissuade all but the large companies with high capital at their disposal.…

    • 942 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Marketing the $100 Laptop

    • 2284 Words
    • 10 Pages

    3. Strongly backed up and supported and even funded by various international organizations and technology companies including: UN, AMD, Google, Red Hat, Brightstar, Marvell, eBay & New Corphas strengthens its credibility and ability to innovate.…

    • 2284 Words
    • 10 Pages
    Powerful Essays