Applying Porter’s Five Forces Model to Evaluate Competitive Forces in a Market Sector

This presentation discusses the application of Porter’s Five Forces model to evaluate the competitive forces in a given market sector for an organization. It explains the five forces - bargaining power of suppliers, threat of substitute products, threat of new entrants, bargaining power of buyers, and rivalry among existing players - and how they can help a company gain a competitive advantage in the market.

Business Strategy

P3.Applying Porter’s Five Forces model evaluate the competitive
forces of a given market sector for an organization.
To analysis the framework of a company's competitive
environment porter's five forces analysis is being used. The five
forces are bargaining power of supplies, threat for substitute
products, threat of new entrants, bargaining power of buyers and
rivalry among the existing players. These five forces analysis can
help the company to build on its packaging goods and processing
to have an advantage in competitive market (Thompson,
Strickland and Gamble, 2015). To not just build upon its
packaging goods or processing these five forces can also help in
the sector of whole consumer goods and profitability.
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Bargaining Power of Supplies-
There are numerous suppliers of raw material of an
organization. Due to suppliers the company will have to put their
price accordingly. If the suppliers demand higher price for raw
material, then the sells will reduce due to the increase in price.
The company to have an efficient supply of good then Kellogg's
should have multiple suppliers. They should experiment with
different raw materials so that if the price of one raw material
goes high then the company can shift to the other supplier.
Suppliers who are fully dependent on Kellogg's company should
be given more preference to because they lose there bargaining
power and this will give more profit to Kellogg's. This
understanding of weaker supplier has been learnt from Nike and
Walmart's mistakes.
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Threat of New Entrants-
The new threats for Kellogg's are getting in new ideas of
doing things and the strategy they are using are reducing cost,
new value propositions and pricing strategy. To prevent threats
Kellogg's has to manage with all these threats and build an
effective boundary around itself. Kellogg's should bring out new
products and innovation in the product is required to not just get
in new customers but also keep the old customers to keep buying
Kellogg's. Kellogg's should invest in its research and
development department because a new entrance will not target
them directly but will help the company to be established before
any other company can product the same. Threat of new
entrants is moderate.
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Bargaining Power of Buyers-
The customers want to buy products of good quality or best
offerings by paying as minimum price as possible. This demand
puts a pressure on the company's profitability and does not work
for a long run. The selling or the customers of the product are
smaller or limited then the more offers and discounts they enjoy
but that is not good for the company (Soltanizadeh and et.al.,
2016). If the company invests in innovation of new product, then
the company can make strong base for itself and have a control
on the bargaining of the customers. Kellogg's should build upon
its customer base so that they have an opportunity in sales and
production but also a control on the customers bargaining power.
Bargaining power of buyers are high.
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References
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 Dranove, D.S. and et.al., 2016. Economics of Strategy.
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