StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

The Five Porter Forces - Essay Example

Comments (0) Cite this document
Summary
In the paper “The Five Porter Forces” the author provides an analysis on which a company should base the production techniques and shows a balance of forces that determine the profitability of an industry. For a firm to ensure maximum profits there is need to use Porter's model…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.8% of users find it useful
The Five Porter Forces
Read TextPreview

Extract of sample "The Five Porter Forces"

The Five Porter Forces
The Porter five forces provide an analysis on which a company should base the production techniques and shows a balance of forces that determine the profitability of an industry. For a firm to ensure maximum profits there is need to use the model to understand the industry context so as to develop an edge over the immediate rivals. The underlying five forces that were given by Porter include the supplier power, buyer power, threat of substitutes, rivalry and entry barriers or threats of new entrants to a market (Greenwald & Kahn 57). Michael Porter has provided that firms can sustain different levels of returns which are dependent on the industry structure but which can also be enhanced by the use and basic understanding of the model. This is thus applicable to the Coke and Pepsi industries who are major rivals in the production of carbonated soft drinks.
The structure of the concentrated producers is such that a blend of raw materials ingredients are produced, packaged in plastic canisters and taken to the bottlers. Concentrate producers add artificial sweeteners to carbonated drinks while the bottlers add sugar or high fructose thus making the process of the former to be less capital intensive than the latter. Production cost is low under the concentrate producers with little capital being used on machinery, labor and overheads and still ensuring that production can serve the whole of the United States (Greenwald & Kahn 91). Innovation and sophistication is a key goal in the firm with high investments awarded to marketing, advertising, research, promotion and bottler support. However, key emphasis is given to the development of customer development agreements with other advanced companies to promote marketing strategies and employment of many people to meet the production demand
Bottlers on the other hand add sugar, carbonated water, high fructose corn syrup to the concentrates and packed it ready for delivery to customers. The sales include maximization of space, positioning of brand, setting displays and points of sale and coming up with promotional activities. The process of the bottlers is capital intensive, involves high speed and high cost to produce packages that are of similar type and size. Much of the system is capital intensive with major investments being accounted for trucks and distribution process.
The industry structure of the concentrate producers is more attractive based on the model provided by Porter on industrial framework. The supplier power of the concentrate producers is higher than that of the bottler despite that they both use the same concentrate. This is because the producers have a high and advanced networking and even though they do this as a joint adventure with the bottlers, they largely implement and finance marketing programs. Secondly there i s low inclination to substitute for a different concentrate and since their product has low production process, the cost of obtaining the concentrate is low ensuring high buyer power.
The two industrial structures have however related in different ventures to reduce competition by ensuring that promotional and marketing activities of the drink are well and effectively conducted. This includes negotiations with major bottler suppliers to ensure the supplier power is maintained and that markets are kept easing off the competition (Greenwald & Kahn 116). Fast delivery and low prices has maintained consumer loyalty and improved the purchasing power of carbonated drinks which is enabled by the low production process of the concentrate producers. Therefore on the bases of the five Porter forces, the concentrate producers are more attractive than the bottlers where industrial positioning is considered.
Works Cited
Greenwald, Bruce & Kahn, Judd. Competition Demystified: A Radically Simplified Approach to
Business Strategy. New York: Prentice Hall. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Five Porter Forces Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/management/1599758-read-the-case-study-attached-and-answer-the-question
(The Five Porter Forces Essay Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/management/1599758-read-the-case-study-attached-and-answer-the-question.
“The Five Porter Forces Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/management/1599758-read-the-case-study-attached-and-answer-the-question.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The Five Porter Forces

Michael Porter 6 Forces

...? Consumer technology industry Michael Porter’s 6 Forces Michael Porter arguers that there are six forces that determines a company’s competitiveness and that these forces may change over time as the company’s conditions change (Ha?ma?la?inen, 2004). These forces are entry threats, rivalry from existing competitors, threat of substitution, bargaining power of suppliers and the bargaining power of buyers and complementary factors. Entrants’ threat New entrants invade the existing market and bring competition and changes in the market environment (Ha?ma?la?inen, 2004). Entries divide the market amongst more sellers and decrease each...
4 Pages(1000 words)Research Paper

PESTEL and Porter Five Forces Analysis for the Metro Bank

...?PESTEL and Porter Five Forces Analysis for the Metro Bank PESTEL Analysis Political forces Political forces in the United Kingdom tend to favor the banking industry in the country because of the positive economic impact it has on the country’s economy, but at the same time, this force impose strict regulations on banks (Chrystal and Mizen, 2006). However, it must be understood that this particular relationship between the political forces in the United Kingdom and the banking industry is subject to change. Due to the wall of frustration that was seen it within the general population, the political forces...
4 Pages(1000 words)Essay

Porter's Five Forces Analises

...? Porter’s Five Force Analysis Table of Contents Introduction 3 Discussion 3 Industry Rivalry 3 Threat of New Entrants 4 Threat of Substitutes 4 Bargaining Power of Buyers 5 Bargaining Power of Suppliers 6 Conclusion 6 References 7 Introduction Porter Five Force analysis is an important framework for business strategy development and industry analysis. This strategic analysis tool helps an organization to develop strategy according to the competitive business environment within the industry. Specifically, organizations determine the competitive factors within the industry that enhance their strategy development process (Ahlstrom and Bruton, 2009, p.131). This essay will implement porter’s five force model to conduct an analysis... of the...
4 Pages(1000 words)Essay

Michael E. Porter devised theoretical frameworks for analysing both an organisation's external environment (the Five Forces Mo

...? Michael E Porter Theoretical Framework AFFILIATION: Michael E Porter Theoretical Framework Introduction Michael Porter's models of Five Forces and Value Chain enable analysts, stakeholders and decisions makers to evaluate the internal and external environment in which the business is operating. Using these models, companies evaluate their current market condition in comparison to competitors. This examination also allows businesses to make strategic and tactical decisions. The reason behind this is that these models exhibit the various areas that need attention within and outside the business. Moreover, they allow companies to understand the issues or...
6 Pages(1500 words)Essay

The Five Forces by Michael Porter

...Background The Five Forces by Michael Porter provides a realistic evaluation of prospective stages of profits, opportunity and risk of a company inan industry (Abell, 1999). The model of Porter is according to the framework of corporate strategy and the threats in the company's external environment. The model gives emphasis on the competitive strategy that an organization implements in accordance to their understanding of the structures in the industry and the changes they undergo (Bakos, 1998). Porter's has initiated the five forces that formed each industry and each market. This model distinguished the strength of...
10 Pages(2500 words)Essay

5 porter forces

...Topic: 5 Porter Forces Affiliation: The five porter forces provide a large industrial analysis and a framework through which business strategic development is formed and evaluated. The forces ensure and maintain a balance of power within a business context as well as provide measures for competition among corporations, markets and industries. The building porter forces under Michels Patisserie, a large cake business influence the potential gains in the company and they include: Rivalry Rivals in a business context can exploit markets and even destroy it depending on the capacity to compete well. A company...
2 Pages(500 words)Essay

Porter forces five

...Porter’s Five Forces al Affiliation Porter’s Five Forces Several companies have several strategies in ensuring that they remain financially relevant in the dynamic business world. It is a fact that in business, there are several challenges that may hinder the success of any business venture. These may range from the strength of the competitors, quality of the products as well as the nature of relationship maintained by the customers (Porter, 2011). However, business ventures always operate with the main motive of making profits. Therefore, profit maximization is always the key issue that drives all the business...
1 Pages(250 words)Essay

The Porter Five Forces Analysis Performed On the Case Study of the Music Industry In 2006

...THE MUSIC INDUSTRY IN 2006 Definitively, the Porter five forces analysis is an approach based framework implemented in business strategy development and industry analysis. The analysis adapts an industrial organization (IO) economics methodology to acquire the five forces that show the attractiveness of the market by highlighting on the competitive intensity. Market attractiveness in this context refers to the general industry gain of profitability. On the other hand, in an unattractive industry or market setup, is one that does not conform to the five forces analysis, since it offers a projection of losses within the...
3 Pages(750 words)Article

Boeing Porter's Five Forces Industry analysis

...industry is characterized by low profits, and issues of bankruptcies and losses (Hecker, 2001). In fact scholar explains that it is always difficult for an airline company to make some profits, because of this high level of competition (Fojt, 2006). The five biggest companies operating in United States are, American Airlines, Delta, South West, US Airways, and United Airlines. These companies are providing very high competition to companies such as Boeing and Air bus (Peoples, 2012). However, because of the similar strategies that they use, there is no major market leader in this industry. All these airline companies have to compete for a share in their market under consideration. Because of high competition in this...
2 Pages(500 words)Assignment

5 Porter's Five Forces on Amazon

...Running Head: PORTER’S FIVE FORCES ON AMAZON PORTER’S FIVE FORCES ON AMAZON By State Date Porter’s Five Forces on Amazon Consumer Power Many Amazon buyers purchase popular products such as books simply because they either do not have the time to visit stores physically or find the conventional purchasing practice tedious. Second, Amazon buyers are inclined to become loyal because of Amazon’s low price offers that arise from low overhead costs (Cukier, Hodson, and Ryan, 2009, p. 4). These two factors raise the bargaining power of Amazon buyers. When Amazon fails to offer the lowest possible offers, the customer will simply search the internet for the next best price. Supplier Power Amazon enjoys a great deal of benefits... ...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic The Five Porter Forces for FREE!

Contact Us