What Is The Five Porter Framework

Decent Essays
The Five Porter Framework is an important tool in the analysis of competition faced by an organisation or cooperation due to its comprehensive approach to analyzing competitors and the threat they pose to a company or organisation (Magretta, 2012). Consequently, five major criteria will be used in the analysis as developed under the framework namely; new market entrants to the wind energy business, threat posed by solar energy (substitutes), the bargaining power of consumers and suppliers as well as inter-industry rivalry within the wind energy industry. Industry Competitive Rivalry. Within the wind power energy market in the U.K, Siemens does not enjoy a monopoly because of the presence of 29 rival corporations and competitors such as Hainsford Energy, B9 Energy and E.on U.K. Most of the competitors Siemen’s has who have managed to create a strong rivalry outsource components from smaller and partner companies. However, Siemens has managed to counter the threats faced by rivals in its industry by creating its factories to mass produce components exclusively in order to lower the price of its goods. Additionally, Siemens has also ventured into the wind installation business to lower the cost of switching to wind energy for its…show more content…
Siemens has contractual agreements with 12 major companies who supply a majority of constituent parts necessary to for the company to manage its wind energy business. Some of the major suppliers include; Mitsubishi Motors North America, Barloworld Supply and Ovation (“Siemens Suppliers - Siemens Supplier List,” 2017). Due to the contractual nature of the agreements, Siemens demands with its suppliers; the company maintains a significant threshold over its suppliers’ ability to increase prices. Also, the number of alternative suppliers is quite significant hence the bargaining power of the suppliers is not very strong and the company can realize a high-profit margin with the right combination of
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