Porters Five Forces: The Robotic Industry - Essay Example

The robotics industry is experiencing growth year after year and the industrial robot application has become more demanding and complicated due to modernization and automation of the manufacturing processes. I will analyze each of the forces and the impact that may be experienced regarding the profitability of the robotics industry.
Existing Competitors: Within an industry, the rivalry among competitors is countered through the use of new products, marketing, and price discounting to be competitive. The robotic industry tends to be an oligopoly since it has a lot of rivals. The potential for product differentiation is high with many differences in power, size, quality, service, and features of the products.

The Power of Buyers: Consumers can capture more value by ensuring that they force the prices down and demand better quality at the industry’s profitability expenses. The top buyer from the robotic industry is the automobile industry. The number of auto firms is small but they buy in large quantities. In contrast to the automotive buyers, other buyers in other industries are moderate in power. They are smaller, many and buy in smaller volumes

The Power of Suppliers: Suppliers have a great influence in an industry by charging higher prices, limiting the quality of services, and shifting costs. The products provided do not usually have substitutions, but some tend to come up with techniques to realize differentiation of the products. The overall power of suppliers in the robotic industry tends to be weak.

Threat to Entry: New entrants into the market pose a threat to the profit potential of an industry. According to Porter, the threat of entry into an industry is dependent on the height of entry barriers. In addition, it is dependent on the reaction of the incumbents expected by the newcomers. When there are few entry barriers and little or no retaliation from the competing industries, then the threat to entry tends to be high. The main barriers to the robotic industry are switching costs, government regulations, economies of scale, and scope, and government regulations.

The Threat of Substitutes: The substitutes to the product offered by the industry tend to perform the same functions but will use different means. The high threats of substitutes often have negative effects on the industry's profitability and its potential growth. The main substitute for the robots is manual labor. Robots tend to do jobs more efficiently and better as compared to manual labor. On the other hand, manual labor is more accessible and flexible as opposed to robots. Read More