Swot Analysis : The Michael Porter 's Model

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The Michael Porter’s Model is used in various industries to analyze business and thereby gaining competitive advantage over other industries. These five components explain us about the challenges that we face when we enter an industry. This model is particularly used when there is a lot of competition within an industry. This helps us to understand and determine advantage and attractiveness of the industry. Rivalry Among Existing Firms: The first component is rivalry among existing firms, here if you have more competitors and all of them offer products and services uniformly, they will have very little power in the market, since both suppliers and buyers will find an alternative way as so many firms are available till they find a good…show more content…
2) Product differentiation produce units that are unique and creates very hard for new firms to enjoy market share. Existing companies have an advantage of accessing government subsidiaries, policies and gain market share because they have good distribution channel and well established themselves in the market. New competitors find difficult to enter in market because they need high capital requirements as well as lower units find very difficult for new firms to sustain in market. Bargaining Power of Buyer: This component clearly tells that buyer has the power to drive prices lower and also increase the product quality at relatively lesser price. Here buyer has the fullest advantage thereby reducing the profits to the industry. Some of the factors to determine the bargaining power of buyer are 1) If buyer needs a large volume, then they have greater bargaining power over firms. 2) Buyers that are stick to a particular company that supply products to them don’t switch because it involves cost. For example, Walmart stores give leverage to buyers who order bulk deal. Bargaining Power of Supplier: In this component, a few companies dominating market in terms of supplying a various special kind of products. Suppliers have the bargaining power to sell their products at relatively higher price and book high profits. A successful company must have lot of suppliers to deal with. Examples are raw
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