Discuss Optus' competitive market position by using Porter's Five Forces Model This essay will discuss Optus’ competitive market position through the analysis of Porters Five Forces Model. Optus, Australia's second largest telecommunications company is situated in a constantly changing environment, easily illustrated by Porters Model. Introduction of Porters Five Forces Model Porters Five forces model is an analytical tool developed by Michael E. Porter in 1979 whilst he was studying at Harvard Business School. Understanding Ports Five Forces brings to light an industry’s current profitability and develops a framework for making educated calculations for anticipating and influencing the competition. Porter wished to create a universal framework which can be utilized in all industries such as the automobile and performing arts industries. The model has five key components which highlights a market’s competitive intensity and overall attractiveness. The strongest force or forces determine the profitability of the industry and form the basis for the strategies that are utilized by the company. The five components of the model are the degree of rivalry; the threat of new entry; the threat of new substitutes; buyer power and the supplier power. Porter describes the five forces as creating a significant framework for different industries such as the fierce rivalry and strong buyer power in the aircraft industry but with relatively benign threat of entry, threat of substitutes and supplier power. Porter envisioned the model to extend the knowledge of Industrial Organisation. The forces explain how a company organises itself in order to satisfy the needs of the consumers with both quantity and quality, while at the same time maintai... ... middle of paper ... ...y.unsw.edu.au/journals.htm?issn=1463-6697&volume=7&issue=6&articleid=1524148&show=html • http://www.emeraldinsight.com.wwwproxy0.library.unsw.edu.au/journals.htm?issn=0951-354X&volume=7&issue=4&articleid=838531&show=html • http://www.emeraldinsight.com.wwwproxy0.library.unsw.edu.au/journals.htm?issn=1756-1396&volume=1&issue=1&articleid=1748179&show=html • http://www.emeraldinsight.com.wwwproxy0.library.unsw.edu.au/journals.htm?issn=0258-0543&volume=25&issue=6&articleid=1784747&show=html • http://www.emeraldinsight.com.wwwproxy0.library.unsw.edu.au/journals.htm?issn=0954-7541&volume=8&issue=1&articleid=1658839&show=html • http://www.emeraldinsight.com.wwwproxy0.library.unsw.edu.au/books.htm?issn=1048-4736&volume=18&chapterid=1784329&show=html • http://www.emeraldinsight.com.wwwproxy0.library.unsw.edu.au/books.htm?issn=1745-3542&volume=4&chapterid=1761553&show=html
In determining the competitive intensity and attractiveness of the market, Porter’s five forces is a framework that would help analyze the manufacturing industry of Lincoln Electric and observe the external and internal environmental factors that influence business strategy development for companies within the industry. The five forces are assumed to determine competitive power in a business situation in which these five forces are Supplier Power, Bargaining Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry.
Porter’s Five Forces is defined as threats of new entrants, bargaining power of suppliers, power of buyers, the threat of substitutes and rivalry among existing competitors. New entrants into the industry aim to gain market share from rivals, so the intensity of competition may require to make changes on current strategy of marketing to maintain existing market share. The bargaining power of suppliers is one of the threats on the industry where price changes or product quality by suppliers can impact the profitability. Therefore, it is important for the companies to keep alternate suppliers or a contract to ensure prices, quality and quantity of the product so to avoid the company's supply from falling behind. The power of buyers can force the companies to lower the prices and offer different type products and service. Buyer can threaten the company with the competitors which may cause a negative impact on the bottom line to the companies. Thus, it is important to create a loyalty market share to avoid this threat. The threat of substitutes increases when another industry offers a similar product or services to customers within the same industry with a lower price. In this case, the industry profitability sinks since the product is available at a better price. This threat forces most competitors to price match or better performance. Rivalry among existing competitors ...
We shall apply the Porter's 5 Forces model to examine the PC market and see how forces of competition influence the profitability of the market players.
The 5-Force Industry Analysis first introduced by Michel Porter, Harvard Business School professor, a quarter-century ago. This theory examines the suppliers, buyers, product substitutes, existing firms’ rivalry and new entrants in a firm’s product market.
Every organization has certain issues the one who deals with those issues may lead to a successful organization, Optus is one of the major organization or the business related to the communication as it’s one of the major network provider in Australia. Critical issues in this organization is mainly related to two types Internal and External contextual issues which is short are the issues occurring in an organization such as proper management of staff, customers, providing the genuine service as per the customers comment etc. On the other hand External issues are the issues relating to the Network, satellite problem, technical support at the base stations and much more apart from all these issues there are few other factors business competitors
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
The eight areas identified for comment and evaluation namely: the model is limited by being based on ten countries, which are either industrialised or a member of a triad; the Government is of critical importance, and has been neglected by Porter; chance although critical, is difficult to predict or guard against; Porter's model must be applied in terms of company-specific considerations and not in terms of national advantages; Porter delineates only four distinct stages of national competitive development; Porter contends that only outward FDI is valuable in creating competitive advantage, and inbound foreign investment is never the solution to a nation's competitive problems; reliance on natural resources is viewed by Porter as insufficient to create worldwide competitive stature; the model does not adequately address the role of MNEs.
Porter’s competitive forces model includes five forces that need to be analysed. These forces include the intensity of rivalry from traditional competitors, threat of new market entrants, threat of substitute products and services, bargaining power of customers and bargaining power of suppliers (Laudon & Laudon, 2007). See diagram below;
Slade’s competitive market is metal product market. It can be analyzed with the Porter’s Five Forces Model: risk of entry by potential competitors, rivalry among established companies, the bargaining power of buyers, bargaining power of suppliers, and threat of substitute products. Appendix 1 shows a summary of the five forces. The risk of entry by potential competitors is high. The capital requirement of small metal companies is not high, so building and establishing this kind of company doesn’t need a lot of resources. Also, Brand loyal of the current existence customers is not very strong thus new entrants are able to compete to enter the market.
The Porter's Diamond Model constructed with four determinants: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. It is essential to interpret competitive factors within this industry and to examine what constitutes new competitive factors as the industry evolves. Porter‘s
In a competitive environment where market is changing instantly, organizations are in a fix to design a strategy that could market their products enticing the consumers to buy their products and services. Market is the arena for business gladiators who fight out for maximum share and profitability and this is possible only through effective marketing strategy. Competing in present economy means finding ways to break out of commodity status to meet customers’ needs better than competing firms (Ferrell and Hartline, 2010). The intensity of competition has increased after the introduction of media and internet where the companies present their product in the best way through advertisements, product reviews, blog entries, etc. With the advancement in technological innovations, companies have found various ways of providing services to the consumers in a cheaper and effective way and this has resulted in communication revolution in late 1990’s as the cellular technology was unfold in most of the regions. Singtel Optus Pty Limited (Optus) is one such company that has evolved during this period as a leader in integrated communications and this paper is assumed to make an analysis of the company’s marketing strategy and its financial position in the market industry.
Until the introduction of a “sixth force” in the mid-nineties, the “Porter’s Five Forces Model” as it was originally developed by Michael E. Porter in 1979 explained how “five competitive forces” determine industry attractiveness. Porter opined that in the fight to sustain long-term profitability, a firm must be strategic towards competition, and beyond competition, keep tabs on a broader set of competitive forces; customers who can drive prices down, suppliers who exercise some level of power, new entrants who might come in to compete for profits and substitute products and services that essentially place constraints on the profitability and growth on any industry. With the extension of this model, the sixth force (as shown in exhibit 1) included showed the impact of complimentary products and services on the attractiveness and overall profitability of an industry. In general, the Six Forces model proposes that the underlying structural drivers of any industry determine the performance of the players.
The porter’s five forces framework is a tool that focuses on the macro environment of a business or company. In this case, I will focus on a leading low-cost airline in Europe which has been developing over the years due to the favorable strategic positioning of the company. The analysis of Europe as a country and the systems that affect it is also evaluated in the paper. However, the analysis will revolve around Ryanair as an airline in Europe and strategic analysis of the environment in terms of the Porter’s five framework analysis.
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.
The Porter five forces model (see Appendix 1) as an external analysis tool was established by Michael E. Porter and firstly announced in his book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” in 1980 . The main idea of the Porter five forces concept is that the attractiveness of a market depends on the characteristic of the five competitive forces that have an impact on a company (see Appendix 2).