Strategic Analysis of Paper Manufacturing Industry

Running head: STRATEGIC ANALYSIS
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STRATEGIC ANALYSIS
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Industry analysis
According to Michael Porter, there are five forces that can affect the industry or a firm’s
profitability. This analysis will cover these five forces and how they can affect the paper
manufacturing industry? (porter, 2008)
These forces include:
1. The threat of new entrants
2. Bargaining power of suppliers
3. Bargaining power of buyers
4. The threat from substitute products
5. Rivalry among the existing players (porter, 2008)
The threat of new entrants
Many are the cases whereby new entrants in paper manufacturing industry tends to bring
in inventions and innovation due to an unused business opportunity they have noticed in the
industry. The innovation tends to reduce the cost of production and all other related products,
therefore the initial firms in this industry will be forced to lower their materials to be at purr with
these new entrants selling at a cheaper cost thus reducing profitability.
Bargaining power of suppliers
The overall impact of supplier bargaining power adversely lowers the profitability of
paper and packaging industry. This is since almost all companies within the paper industry make
their raw material purchase form many different suppliers. Powerful suppliers in Consumer