Porter 's Five Force Analysis

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1.1 Porter’s five force analysis According to Porters analysis, there are five basic factors affecting the operations of an organisation in any given market. These factors are bargaining power of suppliers, bargaining power of buyers/consumers, threat of competitive rivalry, threat of substitutes and threat of new entrants. 1.2 Bargaining power of suppliers The bargaining power of L & T suppliers is high. Most L & T suppliers are organised making the company to be one of the largest engineering companies in Malaysia (and one of the top five private sector companies). Its diversity in engineering sector gives it a strategic position and bargaining power. Moreover, L & T faces reduction of prices by its competitors. For instance, increase in the costs of supply, slump and intense competition in the cement industry and performance of other competitors and faces stiff competition from local companies such as BHEL. Punj and Lloyd, and RITES, as well as the global construction and engineering giants like Hyundai, Saipern, Mcdermoft, Caterpiller. This presents no choice but to enhance its performance even higher. 1.3 Bargaining power of buyers/ consumers Bargaining power of consumers in the engineering industry of Malaysia is commendable. This has been enhanced by presence of L & T’s competitors locally and internationally. To counter this phenomenon, L & T embraced the philosophy of Total Quality Management (TQM) with added emphasis on 'customer delight ', that is, delivering more value than expected by the customer. This move has brought on board more customers for L & T 1.4 Threat of competitive rivalry Competition is high in the engineering sector. The market is controlled by the global construction and engineering giants like Hyun... ... middle of paper ... ...ent and small group activities. It has created an environment for increased empowerment to further advance customer services. TQM Awareness Programmes have been extended to the stockists and vendors to realize improvement in operations and customer service. L & T strongly believe in the idea of internal customers. As a result of its good work, L & T won Good Corporate Citizen Award for 1994 -95 year. ECC Division of L&T received the ICI-Mc-Bauchemie Award for the most outstanding solid structure for the year 1995 – 1996. L & T has embarked on environmental Up gradation- has undertaken extensive tree planting programme. Lastly, contribution to Academics has set up L&T Institute of Technology, a polytechnic; establishment of Management Development Programme Centre etc competes in approximately every sector by virtue of its diversified technical capability and expertise
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