Porter’s Five Forces model
The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works. It identifies the five most common threats faced by firms in their local competitive environments and the conditions under which these threats are more or less likely to be present; these forces are the threat of entry, threat of rivalry, threat of substitutes, threat of buyers and the threat of suppliers. These threats increases a firm's costs, decreases a firm's revenues, or in other words they reduces a firm's performance.
Industry Structure
This model analyzes industry structure and by definition an industry is a group of firms that market products which are close substitutes for each other. Guardian Life Limited offers services such as Individual Benefit Plan and Employee Benefit Plan. The individual benefit plan includes benefits such as Critical Illness Plans, Traditional Insurance Plans, Universal Life & Equity Linked Plans, Interest Sensitive Plans, and other Plans. Also the Employee benefit plan includes: Group Life Insurance, Group Health Insurance, and Pension Administration. We will now state how the 5 forces model applies to Guardian Life Limited.
Threat of Entry
One reason why new entrants pose threat is that they bring additional production capacity. Unless the demand for a good or service is increasing, additional capacity holds consumers’ costs down, resulting in less revenue and lower returns for competing firms. Firms competing in an industry such as Guardian life (and especially those earning above-average returns) try to develop entry barriers to thwart potential competitors (Hitt et. al, 2011). The threat of new entrants largely depends on the barriers to entry that are in place to act as a deterrent