Dannon Porter's 5 Forces

Therefore this industry is a pretty good one to already be in, but would be very tough to try and break into. Since established firms do not have to worry about threat of entrants or substitution, they can focus on making their core business practices cost efficient and profitable. Although firms have to deal with high buyer and supplier power, every firm has to deal with these issues. Therefore this leaves only rivalry to compete on, which forces firms to stay sharp, observe the competition, and provide excellent service to the firm’s customers to generate profit.

Military defense contractors like Lockheed Martin, Boeing, Raytheon, General Dynamics, and the lesser known United Technologies Corporation take a tremendous amount of criticism for their supposed contribution to military conflicts. This is of course an understandable sentiment for people to have regarding these companies. These arms manufacturers traffic in military grade weaponry to various countries that can then go on to use this equipment to do harm. United Technologies Corporation, the obvious subject of this paper, has recently faced harsh criticism, and even legal ramifications, for selling military equipment on the Asian market. The reasoning behind this criticism comes from the fact that selling arms to these Asian nations could

All of the above industries have their relations with the consumers of the world, as well as the competition in the same industry. The world is changing every day with new ideas every day all industries.

Potential for new entrants - The primary prevention to entrance are higher barriers within industry with the threats of new entrants as competitors (Porter, 1998).

Hi Conster, cost behaviors impact businesses in the way that if the raw material increases, the finished goods will also increase. For instance, every year the price of the steel goes up; therefore, any product build with steel will have an impact on their prices to cover up the increase in paid for the raw material (Edmonds,

The sophisticated nature and engineering process makes very hard for new player to enter the market, which limits the competition.

In my opinion the threat to new entry into this industry is low. I say it is low because it will require a high amount of capital in order to get established in the industry. Furthermore it takes a lot of resources, innovation, financing and marketing in order to maintain your company so it cab be able to compete with the juggernauts of the industry. The knowledge of this would deter many companies from trying to enter the industry. Thus diminishing

The bargaining power of suppliers is medium. Since corporates conditions vary, whether the power of suppliers is strong should be determined accordingly. But to survive in the online retailing industry, keeping a close relationship with the suppliers is imperative. Many of the multi-national companies in the industry is depending on limited numbers of suppliers that are concentrated in production, differentiated in products, and not heavily relied on a single industry, which give them great bargaining power and can better facilitate the corporations’ success. Small companies may not have established such strong alliance with its vendors.

Another quality of perfect competition that may be overlooked, but is vital to this industry is the ease of entry into the market. Start-up franchises within this market structure can begin operating with relatively low initial investments (compared to other industries). This is not the case where monopolies are concerned. There are numerous barriers to entry into monopolistic market structures, capital being one of the most prominent barriers.

New firm are unlikely to enter this market because in monopoly market it have high barrier such as economies of scale, patents, licenses, ownership of essential resources and other factors

There is a high reliance on suppliers, whose performance is generally outside the purview of the manufacturer.

Currently, very few companies (read as large companies) are aware about these opportunities and it is these companies which are leveraging it to maximum extent. Thus, there is an enormous opportunity for different companies and especially companies which have niche product line ups.

Entrepreneurs who are ready to start their business today might need to take a second and gather industry information in regards to profitability together before taking a plunge into their chosen industry. Professor Michael Porter developed has developed five competitive forces that if applied to the selected industry the framework will determine profitability. Any change among one of the forces will have an impact on the overall profitability of the company. We will describe each of the five forces: Threat of Substitutes; Threat of New Entrants; Rivalry Among Existing Firms; Bargaining Power of Suppliers; Bargaining Power of Buyers and Application of five forces to the entrepreneurial idea and finally summary of the analysis.

It has a great operation chain to support its operation around the world. From the research centers which mostly locate in European countries like France and Netherlands, the research center of DANONE in the business cluster of Paris-Saclay, is the one of the big research nutrition facility of DANONE and have been playing as vital role to participate in the innovation project as part as the research and development division. Moreover, the benefit from the acquisitions of other food companies initially took the shape of research potential as DANONE penetrate deeply through food technology innovation and it could be the part of the product development of DANONE. For the sourcing of raw material, DANONE has also invested to build standard value to deal with local supplier as partnerships. In some countries that DANONE has the huge market share, raw material from suppliers are not enough for the operating production. Vertical integration is option of strategy. DANONE invest into agricultural farming to be own supplier and eliminate the bargain power of supplier. This can help DANONE to save millions of money and security of raw material for sustainable production. Moving to Processing Factory, DANONE equip the own factories with most advance technology machine that can produce the product with high productivity. This can be the critical resource

Porter’s 5 Forces analysis is a commonly used business theory that identifies the 5 competitive forces of an industry. By identifying and analysing these forces you can determine an industries weaknesses and strengths. Porter recognised the 5 forces in most business markets to be internal rivalry, entry, substitutes and compliments, supplier power and buyer power.