Porter’s Five Forces & PEST Course Number: MGT599 Trident University May 6, 2013 Abstract Porter’s Five Forces and Political, Economic, Sociocultural and Technology (PEST) analyses are key components used to complete an environmental analysis for the packaged food industry. This paper provides a brief summary of the components of each analysis and provides recommended sources to complete the required components within each system. Accessing federal and state government resources, journals, newspapers and industry financial records provide adequate resources to complete each analysis that will ultimately lead to an accurate environmental analysis. Porter’s Five Forces & PEST Porter’s Five Forces and Political, …show more content…
Financial statistics from the host company website or the U.S. Securities Exchange Commission are great sources to obtain information to compare. Additionally, Reuters and Yahoo Finance are excellent websites that provide side-by-side comparison of financial data sets. Lastly, customer surveys obtained from social media websites such as Facebook and testimonials may indicate key buyer decision points. Intensity of Competition Rivalry among existing competitors takes many familiar forms, including price discounting, new product introductions, advertising campaigns and service improvements. High rivalry limits the profitability of an industry. The degree to which rivalry drives down an industry’s profit potential depends upon the intensity with which companies compete and on the basis on which they compete (Porter, 2008). Comparing company websites and business news articles on companies within the same industry provides the necessary insights to the level of competitive intensity. Reviewing trade associations can also provide key information into competition. Lastly, consolidating information from each of the prior Porter Forces provide insight into the overall intensity of competition. PEST Political, Economic, Social and Technological (PEST) analysis describes a framework of macro-environmental factors used in the environmental scanning component
Report includes political, economic, social and technological factors. This analysis is done in order to predict the future impacts of these factors on Arcadia Group. The main points are discussed:
The Intensity of Rivalry among Competitors in an Industry (High): Equally balanced competitors exist within the industry such as BCF and KMD; these firms also face competition from retailers and wholesalers. The growth of the industry is relatively agile in both financial and technological aspects. The intensity or rivalry is further accentuated by relatively high storage and fixed rental costs, extensive product differentiation and minimal switching costs.
The competition has been analyzed by using Porter’s Five Forces Model. By gathering an analysis of the threats that can come from competitive rivalry, potential new entrants, bargaining power of buyers, bargaining power of suppliers, and substitutes, Company G can be better compared to its competitors.
Rivalry among existing competitors describes the intensity of competition between “Broadway’s Café” and existing coffee shops in an industry. A highly competitive industry might result from many players of about the same size, on single dominant competitor, little differentiation between competitors’ products and services
As we know, conditions that cause high rivalry among competing firms can be the numbers of competing firms named above but also when competing firms are of similar side. According with Statista based on US retail sales in 2015 TJX has $23.56 billion and GAP has $12.6 billion and Target (named before as a competition) has $73.23 billion.
Students – Students can play a role in helping to develop the project plan in that they can help test out various features and give feedback on what works and what doesn’t work. Just like in rolling out a new curriculum there needs to be a phase where everything gets worked out with a test class (or multiple classes) to validate the material and tests/assignments. Feedback from former students can also be of some value in determining the best way to add in new features that also contain the things that worked very well in the past.
Porter, M. E. CompetitiveS trategy. (1980): Techniques for Analyzing Industries and Competitors. New York: Free Press.
Intensity of Rivalry: the intensity of competition in this industry is high. As we can
Competition being one of the major issues that often must be addressed in the business world, it is important for a firm to learn on ways to reduce the impact of the competition. Competition is definitely an important factor in helping a business
The PESTLE analysis can be used to assess the strategic relevance of the six principal components of the macro-environmental: political, economic, social, technological, environmental, and legal forces. It can be used as a tool by companies to better understand of the macro- environment they are operating in.
Existing Competitors. Rivalry among competitors within an industry use price discounting, new products, marketing, and other techniques to be competitive. Profitability of an industry suffers from high rivalry. The intensity with which companies compete and the basis on which they compete determine to which degree rivalry brings down an industry’s profitability (Porter, 2008). Pure competition is considered by economists as a competition with a high
Competitive rivalry exists between companies with the same or similar products/services and similar markets. Factors to be considered include:
In this section we look at who are our competitors in the same industry and how can we gain the large portion of the market share and profits. However, if the level of competition becomes too high it can ultimately lead to a decrease in profits. There has been an increase in the amount of competitors on the tourism industry over the last 10 years, with the introduction of online sales and new airlines. For the tourism industry the level of competition can be quite high as
Porter’s Five Forces model is used to evaluate the degree of rivalry between competitors in a given industry through assessing the four forces that lead to this outcome. These forces are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products.
CyberGold, NetCentives, and MyPoints are the three main online Internet marketing firm. All the competitors offer similar services and products. Competition is based on a non-price dimension like marketing, brand, and search technology. Competitive rivalry is high as the cost of switching firm is low. Because this is relatively new business, there are growth opportunities for economic of scale in advertising. (Gamble & Thompson, 2013)