Essay on Strategic Business Analysis: Porters Five Forces

Essay on Strategic Business Analysis: Porters Five Forces

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The forces driving the competition and the intensity of the competition in an industry, are due to its principal economic structure and the behavior of the competitors (Porter, 1998). Therefore, the state of competition as shown in Figure 1 depends on five competitive factors such as industry competitors - rivalry, potential entrants, buyers, suppliers, and substitutes. As Porter(1998) states “ the collective strength of these forces determines the ultimate profit potential in the industry, where profit potential is measured in terms of long terms of long run return on invested capital.”

Therefore, this chapter will focus on the strengths of the competitive forces that drive the organization towards industry profitability by the identification of the structural features of the industry.

1.1.1 Rivalry - Industry Competitors

When analyzing the market, it is understood that the customer plays a huge role and that there is a very low switching cost for the customer due to the very low number of competitors. Even though this is an opportunity to the company at times this opportunity can be a threat to the company. The threat is prevented by gaining the information regarding the customer’s needs and assuring the customer the products that are purchased are safe and ethical. Safety of products are an absolute requirement and that as Hayleys PLC(2012) states “every one of our customers knows that buying a Hayleys product means they are choosing to buy the most optimal combination of safety and efficiency.” The main communication method used to reach the customer is through advertisements and this reaches the customer in the most efficient manner that reaches the customers concerns.

The competiti...

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...s Five Forces), 24 July, [Online], Available: [21 December 2013].
PLC, Hayleys (2008) Business Superbrands, [Online], Available: [10 December 2013].
Porter, M. (1998) Competitive Strategy: Techniques for Analyzing Industries and Competitors, 1st edition, New York: The Free Press.
Porter, M. (2008) 'The Five Competitive Forces That Shape Strategy', Harvard Business Review, January, pp. 1-17.
Rubinfeld (2000) 'Market Definition With Differentiated Products: The Post/ Nabisco Cereal Merger', Antitrust Law Journal, vol. 68, no. 1, pp. 1-10.
Wilkinson, J. (2013) Buyer Bargaining Power (one of Porter’s Five Forces), 23 July, [Online], Available: [20 December 2013].

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