(industry FIVE FORCES analysis chapter) in my dissertation - Essay Example

Bargaining Power of Suppliers Major suppliers of chemical manufacturers include: oil and gas companies (Data Monitor, 2011, p. 13, 16). Even though oil and gas products are homogenous or undifferentiated by nature, we should keep in mind these materials are non-renewable items. As a common knowledge, there is no other product substitute for oil and gas products. Considering the fact that there are only a few numbers of large-scale companies that could supply oil and gas to chemical manufacturers, the bargaining power of suppliers is considered high.

Therefore, chemical manufacturers do not have the power to control the market prices of oil and gas products. Due to the fact the number of oil and gas suppliers is relatively few as compared to the number of chemical manufacturers around the world; the cost of switching from one supplier to another and suppliers’ dispensability is moderate (Data Monitor, 2011, p. 16). Bargaining Power of Buyers Large multinational companies that usually purchase chemicals on a daily basis include manufacturing companies that manufacture the following items: plastic, perfume, pharmaceutical products, soap and detergents, shampoo, and people who are involved in agricultural businesses among others (Data Monitor, 2011, p. 13, 15). .

By nature, chemicals are undifferentiated products. For this reason, the buyers’ cost of switching from one chemical manufacturer to another and product dispensability is low (Data Monitor, 2011, p. 15). Even though establishing a strong business relationship with chemical manufacturers increase customer loyalty, the fact that the cost of switching is low makes the buyers’ tendency to switch from one chemical manufacturer to another moderate. In most cases, potential buyers are sensitive to price.

Therefore, the only way for chemical manufacturers to persuade potential buyers to purchase their products is for them to be able to manufacture their products at a lower price. Rivalry among Existing Firms Competitors within the chemical manufacturing industry includes chemical manufacturers of basic chemicals (i.e. petrochemicals and plastic resins), specialty or fine chemicals (i.e. additives, paints, coating, fragrances, soaps, and detergents), pharmaceutical products (i.e. medicinal active ingredients and formulations), fertilizer and agrochemicals (i.e. chemical fertilizers and herbicides, insecticides) (Data Monitor, 2011, p. 7). Because of the continuously increasing number of chemical manufacturers in the global markets, the market competition within the chemical manufacturing industry is intensely competitive.

In fact, there are quite a lot of local and international companies that are continuously competing for the same group of customers. Upon analyzing the chemical manufacturing industry, it is clear that the rivalry among the manufacturers of chemicals is very intense due to the fact that these companies are