Porters Five Forces

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| A Review of Almarai’s Competitiveness in the light of Porter’s Five Forces | by | | Hassaan Jamshed HND in Business Studies (2012-13) | 7 Oct 2012 | | Contents Introduction Porters Five Forces Threat of New Entrants Bargaining Power of Customers Bargaining Power of Suppliers Rivalry among Existing Firms Threat from Substitute Products Conclusion Introduction In 1977, HH Prince Sultan Bin Mohammed Bin Saudi Al Kabeer saw that the domestic market was growing and to satisfy its needs, Saudi Arabia’s traditional dairy farming industry had to improve itself. He guided and financed for his vision to become a success which led to many agricultural projects being launched. Initially it was just fresh milk…show more content…
Lacnor, Al Rawabi etc. Thus, Almarai will increase its sales; it will be more in demand and will increase its percentage in the market shares. Where the market growth is slow many firms compete with each other for maximum share in the market. Exit barriers increase the difficulty level for existing firms to quit competing in the industry. In my views, in any industry there will be rivalry among the firms and if there are more firms then there will be more competition for increase in market share. The threat from substitute products This is also a threat because customers get what they want the easier way. If Almarai produces fresh milk which doesn’t last long and costs more and Lacnor produces long life milk which is cheaper, then the people would tend to buy Lacnor as they can keep it for months while Almarai’s fresh milk would last for just a couple of days. Whereas if Almarai produces powder milk and it is relatively cheaper than any other product in the market then customers would go for the powder milk. From my point of view, I would say that substitute products can change customer opinions which can be a threat to the firm’s market share. Conclusion Michael Porter has given an effective and efficient tool for analyzing competition in the industry and allows managers to shape their responses to

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