...Introduction----- The diamond model is an economics model developed by Michael Porter in his book The Competitive Advantage of Nations. In the mid-1980s, Professor Michael Porter of Harvard Business School developed the model to assess the competitiveness of regions, states and nations. It’s a model that attempts to explain the competitive advantage some nations or groups have due to certain factors available to them. Porter used a diamond shaped diagram to illustrate the determinants of national advantage. That’s why it is called the Porter’s diamond model. The body -------- Now we will use some examples to illustrate the determinants of national advantages. For example:- • Germany is associated with good car making • Japan is strong with respect to micro-electronics and cameras. • France is strong with respect to wine. • The UK (at least until recently!) was associated with a strong financial services industry The chart --- Factor conditions: Some countries enjoy natural advantages. For example, France starts with an advantage in the wine industry because of its climate and soil. Finland, however, is never likely to be good at producing wine. Germany has an abundance of iron ore, ready to be used in the car and other industries. Climate and natural resources are known as basic factors. In addition, countries can develop advanced factors such as their transport infrastructure, telecommunications, and educational system. Demand conditions: The first step...
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...PORTER’S FIVE FORCES MODEL Porter’s five forces is a framework developed by economist Michael E. Porter to analyze level of competition within an industry and business strategy development. Further, it determines the probability and attractiveness of a market or market segment. In 1979, Porter was an associate professor at Harvard Business School, the Porter’s framework maintains that the attractiveness of a market segment is determined by five competitive forces namely: 1. Threats of potential new entrants 2. Bargaining power of buyers 3. Bargaining power of suppliers 4. Threats of substitute products 5. Rivalry among competitors 1. Threats of potential new entrants The threat of new entrants is usually based on the market entry barriers, which can be said to provide obstacles for newcomers to gain a foothold in any given industry. These barriers can take many different forms. Briefly, it can be said that entry barriers exist whenever it is difficult or not economically feasible for an outsider to copy or imitate the existing player’s competitive capabilities. Common forms of entry barriers are depicted below: * Economies of scale * Capital requirement of entry * Access to supplies and distribution channels * Customer or supplier loyalty * Lack of experience in industry * Legal restrains such as trade barriers 2. Bargaining Power Of Buyers Important determinants of buyer power are the size and the concentration...
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...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...
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...Porter's 5 forces model is a powerful way of analysing the competitive forces that shapes every industry in general. This was developed by Michael E. Porter of Havard Business School in 1979. This tool helps you to identify whether a new product, investment, services or business have the potential to be profitable. The 5 competative forces that are taken into consideration are: Competition in the Industry Potential of new entrant into Industry Power of Suppliers Power of Customers Threat to substitute products Lets discuss each of these points in detail: Competition in the Industry: This describes the competition between the existing firms in an industry. Greater the competitive riverly (companies providing equally good products or services) lesser are the profit margin. The price of the product/services is the single most defining factor that influences the customer's buy decision. Hence to maintain low cost, companies consistently has to make manufacturing improvements to keep the business competitive. This requires additional capital expenditure which tends to eat up company's earning. On the other hand if no one else can provide products/ services the way you do you have a monopoly. Lets try to explore these points in more detail. Look at the current senario, the small car market in India is very competitive with players like Maruti Suzuki, Tata Motors, Huyndai etc. which was preety much dominated by Maruti. But with launch of Nano the 1 lakh car the...
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...Martin Johnson is deciding whether to switch career and become a farmer – he's always loved the countryside, and wants to switch to a career where he's his own boss. He creates the following Five Forces Analysis as he thinks the situation through: Figure 2 - Porter's Five Forces Example - Buying a Farm This worries him: The threat of new entry is quite high: if anyone looks as if they're making a sustained profit, new competitors can come into the industry easily, reducing profits. Competitive rivalry is extremely high: if someone raises prices, they'll be quickly undercut. Intense competition puts strong downward pressure on prices. Buyer Power is strong, again implying strong downward pressure on prices. There is some threat of substitution. Unless he is able to find some way of changing this situation, this looks like a very tough industry to survive in. Maybe he'll need to specialize in a sector of the market that's protected from some of these forces, or find a related business that's in a stronger position. Key Points: Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. With a little adaptation, it is also useful as a way of assessing the balance of power in more general situations. It works by looking at the strength of five important forces that affect competition: Supplier Power: The power of suppliers to drive up the prices of your inputs. Buyer Power: The power of your customers to drive...
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...PROJECT MANAGEMENT [BBA 615] PORTER’S FIVE FORCES MODEL ON SONY CORPORATION PORTER’S FIVE FORCE ANALYSIS CONSUMER ELECTRONICS INDUSTRY [pic] 1. THREAT OF NEW ENTRANTS - LOW ➢ Economies of Scale ➢ Product Differentiation ➢ Capital Requirements ➢ Switching Costs ➢ Technology, Know-how and Innovation ➢ Government Policy 2. BARGAINING POWER OF BUYERS -HIGH • Products are fairly undifferentiated • Buyers face few switching costs • Online shopping has increased the bargaining power of buyers • Buyers are price sensitive and demand high quality 3. BARGAINING POWER OF SUPPLIERS - LOW • Big global supply chain management (Suppliers are not concentrated) • Suppliers are forced to cut their prices or go out of business • Direct negotiation with suppliers in order to encourage: • Reliable supply • Faster delivery • Lower prices • Many OEMs start to produce their own components in-house 4. RIVALRY AMONG EXISTING COMETITORS - HIGH ➢ Numerous and rather equally balanced competitors. ➢ Short product life-cycle ➢ High R & D costs ➢ Lack of differentiation or switching costs ...
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...Bargaining power of Supplier Bailey’s Woodworking has little or no revenue to negotiate any reductions on bulk purchases and this leaves them in a poor negotiating position. The use of teak as its premier raw material will create a disadvantageous position and while alternatives are used the teak is creating a competitive advantage as a more superior product different product. The bargaining power of suppliers is therefore low although the market is not saturated with providers the cost of switching suppliers is not high because it is price stimulated rather than quality. Bargaining power of the Buyer In the house hold industry the customer has many choices but Bailey had a reputation of best in class for product quality. The product however has been at a slightly higher price and could be sourced from competitors. In the commercial market the buyer has considerable leverage with the tendering process and often causes the bids to be lower than the regular pricing used by the companies. Companies even bid below material cost in order to gain reputation with major companies. Bailey does not need to practice under-pricing since it has a superior product. Therefore the buyer had power since the cost of switching is low and there are alternative suppliers. Threat of Substitutes In this industry competition from retailers are present. So prices should be competitive in nature. In this market product for product elements exist since customers just want furniture...
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...Firm Rivalry This part of the diamond focuses on the affect that competition has on rival firms in a relevant industry. Firms identify their strengths and capabilities to build on their market position and use a variety of strategies to remain competitive. True rivalry exists between firms that are comparable in size, power, product or service offering and their actions induce a response from their closest competitor. There are many strategies that firms engage in their attempt to gain a leadership position in the market, they include, pricing, product differentiation, brand image and the support services offered to consumers. A strategy based on solely on pricing can be detrimental to a firm as the reduction in prices also reduces profits and encourages competitors to follow suit, which in turn can spark a price war. This was evident in the 2011 milk war. Coles, followed closely by Woolworths reduced the cost of Homebrand milk to $1 a litre, the chief for Coles reported that they were the losers in the battle as the competition has made it impossible to return milk prices to a position of positive return (Anon, 2011). Intense rivalry can reduce the available profits within an industry with consumers reaping the rewards that remain for the taking due to firms continually lowering prices in an attempt to remain competitive. The differentiation of the products or services offered by firms remains the key indicator of profit levels, as firms that offer little difference...
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...The Coca-Cola Company Case Synopsis Submitted by: Christopher Hnatko, Romita Sidhu and Li Zhang Business 478- Section D300 March-17 2014 INTRODUCTION Firm History The Coca-Cola Company is a beverage company. “It owns or licenses more than 500 nonalcoholic beverage brands” (MintGlobal, 2014). It primarily serves sparkling beverages but also wide range of still beverages such as water, juices, ready-to-drink teas and coffees, and sports drinks. The Coca-Cola Company was founded in 1886, by John S. Pemberton and served Coca-Cola at a local Pharmacy in downtown Atlanta, Georgia (The Coca-Cola Company, 2014). In 1892, Asa Candler purchased and incorporated the Coca-Cola Company as a Georgia Corporation (The Coca-Cola Company, 2014). Fourteen years later, under Candler’s leadership, bottling operations began in Canada, Cuba, and Panama. In 1919, the Coca-Cola Company was purchased by a group of investors led by Ernest Woodruff for $25 million. From its early years, Coca-Cola Company made significant innovations in the beverage industry, such as six-bottle carton and steel 12-ounce cans. Additionally, it continued to expand internationally (The CocaCola Company, 2014). In 1923, Robert W. Woodruff was elected as president of the Coca-Cola Company, who also served as a Chairman of the Board in 1939. The very first new product distributed by the Company was Fanta Orange in Naples, Italy. After the success of this product, it established a diverse portfolio through...
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...Ocean Spray Cranberry (OSC) Analysis I. Porter Model: Buyers – a strong competitive force Retailers are the primary buyers for cranberry-based products, but distributors play a major role in making products available to retailers. Both of these are able to exhibit considerable leverage – retailers because of their control of space allocation and placement, and distributors because of their importance in getting the product to market. Suppliers – a weak competitive force Cranberry growers are very weak in their negotiations with cooperatives and other buyers. Growers have no ability to negotiate for higher prices since processors pay market prices for commodities like cranberries and other crops. In addition, growers have contributed to the dramatic price decreases in the industry since 1996 by producing far more cranberries than what has been demanded. Substitutes – a strong competitive force Other fruit-based juices, beverages not containing fruit, and water are considered to be strong substitutes for cranberry juice – especially in single serving packages. There are fewer substitutes for cranberry products sold for seasonal consumption. Threat of New Entry – a weak competitive force Threat of new entry is weak due to excess production capacity already and competition for retail shelf space. Northland Cranberries had recently entered the fruit juice industry, but had yet to gain notable success and only contributed to a further price war among producers. PepsiCo...
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...[pic] Keuka College Bachelor of Science in Management List 1. Develop a Porter 5-forces model of the casino industry. Make sure you discuss each of the five forces in a separate paragraph or section 3 2. How are the gambling companies in Las Vegas responding to the changes in the industry structure and the increased competition . 21 3. How have the casinos in Atlantic City tried to compete with Las Vegas? What threats do they face . 23 Chen Huisheng 323945 Lin Weijie 324066 1.Develop a Porter 5-forces model of the casino industry. Make sure you discuss each of the five forces in a separate paragraph or section. For purposes of this case, we will define the casino industry as including full-service, diverse entertainment (i.e. traditional) casinos of Las Vegas and Atlantic City, and treat other gambling alternatives (e.g. Native American casinos, riverboat gambling, etc.) as substitutes. When discussing each of the five forces, be sure to consider each of the factors relevant to each of these five forces as we discussed in class. In terms of Porter’s 5 forces analysis, the bargaining power of suppliers is weak because of the fact that casinos basically provide their own services with internal resources, such as employees properly trained in various casino games. The bargaining power of customers is strong, especially because even a slight change in the demand for casino services could directly impact the revenues of the industry...
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...A Critical Analysis about Competitive Advantage of Apple Inc. based on the Porter`s Five Force Model Northeastern University Strategic Leadership Xiaolong Cao Instructed by James Lux June 6th 2016 Abstract This article aims to detect two key areas in Apple`s competitive advantage through using Porter`s Five Force model. According to the knowledge learned from class, there is no forever lasting competitive advantage, so through analyzing the case of Steve Jobs competitive strategy it presents a clear and reasonable structure and explanation of their competitive advantage. After doing this analysis, this article helps to fine both the disadvantage and advantage of their competitive advantage, and each of them contains two aspects according to Porter`s Five Force Model, which provides a reliable and meaningful support to test and excavate the effect of competitive advantage and future developing orientation. Introduction In the modern time, there are numerous resources that identify the importance of the competitive strategy. The ever growing technological trends and volatility within business operations in today's society make it extremely difficult for organizations to stay complacent with their strategies. Adjustments and new ideas need to constantly be developed to be able to maintain a competitive edge. The most obvious examples happen in IT industry, high performance laptop was a competitive advantage 2 years...
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...Michael Porter’s Five Forces Strategic Competitive Model By Rajshekhar.V IGTC 2012-14 Roll No. 29 Indian Automobile Industry The Indian automobile industry is the tenth largest in the world with an annual production of approximately 2 million units. Indian auto industry, promises to become the major automotive industry in the upcoming years and the industry experts are hopeful that it will touch 10 million units mark. Indian automobile industry is involved in design, development, manufacture, marketing, and sale of motor vehicles. There are a number of global automotive giants that are upbeat about the expansion plans and collaboration with domestic companies to produce automobiles in India. Porter's five forces model on Automobile Industry * Barriers to Entry – Automobile Industry is a capital extensive and labor extensive industry. The emergence of foreign competitors with the capital, required technologies and management skills began to undermine the market share of many automobile companies. Globalization has lead to huge investments and has caused businesses to move from national and domestic markets to a worldwide environment which is a huge factor affecting the auto market. Off late, it is becoming easier for foreign automakers to enter the Domestic market .Automobiles depend heavily on consumer trends and tastes. While car companies do sell a large proportion of vehicles to businesses and car rental companies (fleet sales), consumer sales is the largest source of...
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...STRATEGIC MANAGEMENT ASSIGNMENT ASSIGNMENT ON ANALYSIS OF THE SECTOR USING PORTERS DOUBLE DIAMOND MODEL ON INDIAN AUTOMOBILE INDUSTRY Submitted To Prof. A. K. Kher Submitted By Rameez Bagban 03 Shahanawaz Mujawar 11 For the academic year 2014-15 INTRODUCTION: The Indian automobile industry is one of the key drivers of industrial growth and employment, which will gain rapid importance. In order to accelerate and sustain growth in the automotive sector, a roadmap is needed to steer, coordinate and synergize the efforts of all stakeholders. Exogenous and endogenous factors affecting industry also affects the competitiveness of the firms. Competitiveness captures the awareness of both the limitations and the challenges posed by global competition as an exogenous factor. Underdeveloped economies tend to be competitive by producing cheaper products, developing economies by producing better products, and developed economies by producing innovative products continuously. Though Indian automobile manufacturers are manufacturing innovative products and leading India to a new summit, there are various roadblocks, which prevent this industry from being a global player. COMPETITIVENESS DEFINED: Competitiveness has emerged as a paradigm towards the economic development. Michael Porter has defined competitiveness as productivity with which a nation utilizes its human, capital and natural resources. To understand competitiveness, the starting...
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...Acknowledgement This report is entirely prepared in the form as required by the Faculty of Management (FOM), T.U. (Tribhuvan University) for the partial fulfillment of the BBA (Bachelor of Business Administration). This project is assigned to us as a part of our practical examination under Management Information System by Tribhuvan University, aimed at giving knowledge of practical working environment. Apart from the University Examination, this project is almost like on the job training. So the knowledge we had gained during this fieldwork study is very important for us. We are very thankful to many people who have helped us during our fieldwork. We would like to extend our heartily appreciation to Mr. Shailendra Khadka Yadav, Head of Department, for guiding and exposing some of the core ideas put forth in the project. We are very much thankful to him. We would also like to thank our principal, Mr. Ramesh Pandey, who helped us during the project. We owe our depth thanks to all the other persons who directly and indirectly helped us in completion of this report. Chapter I: INTRODUCTION 1.1 Introduction to Hotel Mount View This 95 room hotel is perfectly located in the center of the main tourist area and surrounded by shops, local markets and good restaurants. The hotel is regularly used by trekking companies thanks to its close proximity to many famous climb sites as well as base camp at the foot of Mount Everest. The guest rooms are spacious and...
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