Conduct a ve forces model for the industry of your choice (except airlines). Cle

Question

Conduct a ve forces model for the industry of your choice (except airlines). Clearly de ne your industry before you begin (in other words, how broadly are you de ning your industry?). To guide your analysis, begin with the bargaining power of buyers and suppliers. Who are the buyers and suppliers? Discuss whether they have bargaining power. Who are your competitors? What are the barriers to entry into this industry? What other substitutes limit the sales and pro ts for rms in this industry? When discussing the implications of your ve forces model, ask yourself the following questions:

a. Which forces of competition are most threatening now? Which do you expect will change over the next ve years?

b. What are the implications in terms of pro t margins in the industry today? Over the next ve years?

c. What actions does this analysis suggest a current industry player should imple- ment in order to strengthen their competitive strategy?

Explanation / Answer

Porter’s Five-Force analysis on the Computer software design and manufacturing for office applications:-

1. Threat of new entrants:-

   a. existing player can give competition by reducing their price.

   b. low cost of entry so too many competitors.

   c. saturated industry with high competition.

2. Threat of Substitutes:-

    a. software market is very versatile.

    b. too many players with unique ideas.

3. Bargaining Power of Suppliers:-

     a. it’s very low in this case as there are too many players in market.

4. Bargaining power of Buyers:-

     a. large number of players competing for same set of customers.

     b. as bargaining power is high customers get attractive offers.

5. Rivalry among Existing Players:-

     a. rivalry is very high due to large number of players.

     b. intense pricing wars.

a. The most threatening force of competition is low cost for entry so many new players are ready to enter the market. No there will be no change in next five 5 years and its fair chance that the competition will increase as the number of new player will keep on growing.

b. The industry has very good profit margin as most of its clients are from big industries of different countries. In coming 5 years the margin will sink as too many competitors are ready to work at cheaper prices.

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