Michael Porter Five Forces: A Case Study of Al Ain Dairy

Running Head: Al AIN DAIRY 1
Michael Porter Five Forces: A Case Study of Al Ain Dairy.
By
Course Name/ code
Faculty
University Affiliation
Date

Al AIN DAIRY 2
Michael Porter five forces is a framework that is used to analyze the competitive forces
within an industry (Dobbs, 2014). The model is applicable in any industry. It is used by
organizations when they want to assess their competitive position within their respective
industries. The model presents five forces which influence competition (Dobbs, 2014). Once an
organization analyzes these forces, it is able to come up with strategies to overcome each of the
forces. In this document, the focus will be on the dairy industry in the United Arab Emirates. The
five forces are;
Threats of New Entrants
This refers to the threat that new competitors who get into the industry may pose to
existing businesses (Dobbs, 2014). In the case of Al Ain dairy the new entrants may include; new
dairy companies which may be established in future and other companies which may diversify
into the production and selling of powdered camel milk and ice cream. Once they enter the
industry they will pose a lot of competition to Al Ain dairy since they will disrupt the market.
These competitors mainly come in when the product is at the growth stage of the product
lifecycle (Chang & Wu, 2014).
They are various strategies that Al Ain dairy can use to overcome this threat. The
strategies include; first, forward integration which involves locking-in customers to the
organization. This minimizes the number of customers that the new entrant will get thus
discouraging new entrants (Chang & Wu, 2014). Secondly, backward integration which involves
locking-in suppliers to the organization. This creates a shortage of supplies to the new entrants
(Chang & Wu, 2014).
Third, competitive pricing which involves charging lower prices than the new entrants
can afford to charge. This puts a barrier to the new entrants. Fourth, economies of scale which
involves buying raw materials in bulk and producing the products in bulk in order to enjoy
quantity discounts (Henisz & Zelner, 2012).

Al AIN DAIRY 3
Threats of Substitute Products
This refers to the threat that other products which can be used for the same purpose as the
one an organization is producing offers to the organization (Dobbs, 2014). The major substitute
products that pose threats to Al Ain’s dairy powdered camel milk and ice cream include;
powdered cow milk and ice cream, and non-powdered camel and cow milk. Substitute products
are a major threat since they provide an alternative to customers.
The various strategies that Al Ain dairy can use to overcome the threat of substitute
products include; first, providing high-quality products. These will remain attractive to the
customers despite the presence of alternatives (Porter & Heppelmann, 2014). Secondly, increase
the customers’ switching cost. This can be achieved by biding the customer to Al Ain’s products
through techniques such as repurchase discounts, promotion schemes, among others. This will
make the customers find it difficult and costly to shift to another product.
Third, product differentiation. This involves making the product to be unique so that
customers cannot find a suitable substitute for it (Tanwar, 2013). In this case, Al Ain dairy can
focus on adding new health additives to powdered camel milk that are not available in powdered
cow milk. Fourth, strengthening the brand image. This involves making the brand to be the most
preferred among customers so that customers will buy the product due to the brand. This will
limit substitute products from thriving well in the market (Porter & Heppelmann, 2014).
Competition Rivalry
This refers to the competition that arises from the already existing competitors in the
industry (Dobbs, 2014). Currently Al Ain dairy is the first company to produce powdered camel
milk and ice cream (Astley, 2019). Therefore, this force is not currently present in the industry
and that line of products. However, with time and as the product reaches the maturity stage of the
product lifecycle this force will be the major challenge that Al Ain dairy will have to deal with.
Thus, Al Ain dairy needs to have sustainability in the market in order to overcome industry
based competition (Namada, 2018).