Crh Plc. Strategic Analysis

2208 Words9 Pages
Environmental analysis First of all it is considered as crucial to find out in which environment the company CHR exists, therefore I decided to use Porter`s five forces model and Pest analysis. 1. 1 Porter`s five forces model This model was articulated for the first time by Michael Porter in 1979 in his successful record-breaker book named “How competitive forces shape strategy” (Porter, p.78). Five forces are illustrated in following picture. Source: Porter, p. 78 Before this analysis will begin, it is vital to stress that this model is well-known as an effective instrument. An advantage of this model is that it captures the immediate environment in which the company competes. It allows to clearly understand the forces which…show more content…
For the main competitors in the global market who share the dominant position are considered a French company Lafarge SA, the Swiss Holcim Ltd. and the third main competitor is a Mexican building construction company CEMEX, SAB de CV. (hoovers.com, zdroj č. 4). As it was mentioned above, there also exist a lot of small and medium sized companies, which operate on the market, but more locally while not covering large market territory. From the foregoing can be considered that the strength of the competition is quite high. It is known that this business sector is highly fragmented while offering products that do not significantly vary from each other in this multi-vendor supply environment and the market is basically stable. CHR is consequently dependent on the price wars with its competitors to maintain its position. Bargaining power of buyers Since for the companies in the construction industry it is not typical to bind their customers with long-term contracts and similar measures, it can be conclude that the switching cost of this industry is relatively low. The customer himself does not have a problem to change his supplier whereas on the market operate quite a large number of firms. The market is fragmented into more businesses offering similar products, respectively same and homogenous. The level of customer information rate is also fairly high. Thus the assumption is that the bargaining power of customers is rather high and hence
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