P3. Application of Porter's Five Forces model for evaluating competition in market

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Business Strategy
Table of ContentsP3. Application of Porter's Five Forces model for evaluating competition in market...........1M3. Devise appropriate strategies to improve competitive edge and market position..........3P4. & M4. Application of models, theories and concepts for forming better understanding andinterpretation and strategic management plan........................................................................3CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
P3. Application of Porter's Five Forces model for evaluating competition in marketPorter's Five Forces model is a tool developed by Michael E. Porter to identify the levelof competition prevailing in a particular sector. It provides a complete picture by applying fivefactors of competition (Bharadwaj and et.al ., 2013.). It helps in determining attractiveness i.e.profitability of an industry. It is useful for assessing the effect of competition in the long-run formaking strategic decisions which can be implemented within the organization. Also, it isbeneficial for finding out the areas in order to differentiate them into the categories of strengthand weakness. This model has been used in the context of Toyota which is as follows:Threat of new entrantsAutomotive industry offers opportunities which attract number of potential entities tomake entry in the sector leading to more competition. The preferences and choices of buyerskeep changing very often which gives a chance to large as well as small enterprises to enter themarket for carrying business. UK's automotive market does not have effective barriers and needinvestment which is again a reason for intense competition. In addition to this, this industry isfacing downturn which can be beneficial for other companies. With regard to Toyota, it is asuccessful business venture which has policies and strategies which are effective. However, itcan make adjustments in current services. Furthermore, it can focus on increasing the quality ofthe cars which are being manufactured so as to give tough competition to other entities. Apartfrom this, it can increase the productivity to meet production targets.Power of suppliersSuppliers are important who are responsible for providing the raw materials formanufacturing the final product.UK's automotive industry is growing with the time and has alsoattracted suppliers to launch their business there (Blackburn, Hart and Wainwright, 2013). Theprice of the final goods depend upon cost of inputs. Furthermore, there is a cost involved when acompany switch from one supplier to another. The bargaining position is considered to be high ifthere are limited suppliers in a particular market and vice versa. In the context of Toyota, itproduces cars which are of high standards and prefers buying raw materials from selectedsuppliers. In UK's automotive market, the number of suppliers is not limited hence, this meansthat bargaining position is not high. It provides power in the hands of Toyota to select a price forwhich inputs can be bought in order to make cars. Furthermore, it can focus on introducingpolicies for maintaining healthy relations with suppliers in order to have long term profits.1
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