A porters 5 forces analysis of Shinetech (Chinese IT Outsourcing company) - Essay Example

Topic: A Porters 5 Forces Analysis of Shinetech (Chinese IT Outsourcing Company) Affiliation: Title:Date:IntroductionThe IT industry in around the world continues to experience enormous transitions, upgrades and advancements. Shinetech outsourcing company in China keeps at par with this trend in a bid to offer the IT industry globally competitive IT software outsourcing services. This firm can be analysed using the Porter’s five forces to determine its position in the industry as well evaluate the manner in which it conducts its business in a globally competitive industry.

Its agile thinking fits it into the Porter’s model, making it possible to undertake an all-round analysis of the company using the five forces. Analysis of the company using the five forcesRivalry degree in the industryRivalry is an inevitable phenomenon in the business environment. Firms operate in a competitive environment, all of them aiming at capturing a sizeable market share that adequately maximizes revenue generation and profitability (Porter, 1979, p.5-8). Shinetech Company is a key global IT industry mover.

To counter rivalry issues, the company employs agile thinking in its operations and further undertakes quality assurance in a bid to maintain a competitive advantage over its rivals.Threats of Entry in the industryThe IT industry unlike other industries does not face strict barriers to entry. In major and highly expensive product and service offering situations however, significant entry barriers are experienced. New entrants into the industry reduce marker share ratios and further reduce revenue generation and profitability for other firms.

Entry of new firms or establishment of new divisions by existing firms poses survival threats for some firms, while it creates high benefits for others. To remain competitive in this environment, Shinetech Company has developed an in-house programme for its clients, reduced time to the market and adopted greater flexibility in business (O’Shaughnessy, 2006, p.13-17). As a result, the company maintains its market share and continues to capture more even with entry threats. Substitutes and the underlying threatsThe company enjoys a diversified product and service portfolio for its customers.

New business entities keep coming up, a scenario that Shinetech is concerned about. It is understood that customers are rational, and they therefore seek to maximize their utility at the minimum cost possible. This means that they prefer low costs but high product and service quality. Firms on the other seek to sell as much as they can and at the maximum price possible. Shinetech Company is result-oriented, and therefore has a competitive advantage over rival companies.Power of the buyerThe company’s clientele is primarily global enterprises that demand software outsourcing services.

The company values the privacy of its customers, and it therefore maintains policies that monitor and upraise this aspect. This among other factors has enabled the company to create a high buyer power. In so doing, its collaborative developments around the globe have significantly grown. This has provided the customers with a favourable buyer-seller interaction criterion. As a result, customer switching costs are raised and the market share of the company is kept constant, if not increasing. Power of the supplier Supplier power is an influential factor in the business environment.

High supplier power is depicted by the ability of suppliers to charge their customers different prices for the supplies made prior to value creation for the customers (Baker, 2008, p.167). Shinetech Company maintains collaborative efforts and programmes with its suppliers in a bid to reduce or maintain low supplier switching costs. The company evaluates the market and industry trends before making any supplier decisions so that the decisions reached are informed by real market information and phenomena.

ConclusionAn obvious inevitable scenario in the market or industry context is competition. Firms that successfully create their brand names enjoy high competitive advantages. It is important that key players in the IT industry be highly adoptive to changes and advancements in technology, so that they meet new and emerging needs that come with these advancements. The uniqueness of Shinetech Company in its service mix offering continues to place it at a higher position in the industry compared to its rivals, thus giving it an industry-based competitive advantage.

ReferencesBaker, M, (2008), Marketing Strategy and Management, London: Macmillan.O’Shaughnessy, N, (2006), Michael Porter’s revisited, Management Decision, Vol. 34 Issue 6, pp.12-20. Porter, M, (1979), How competitive forces shape strategy, Harvard Business Review, Vol. 57 Issue 2, pp.5-8.