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Porters Qs n Ans..

Porters Qs n Ans..

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Published by Arghya Neel

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Published by: Arghya Neel on May 24, 2012
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05/13/2014

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In this study Porter’s 5 forces analysis (Michael E.

Porter, 1980) has been conducted to explain the industry attractiveness and long-run industry profitability

Bargaining power of buyers
  It has been measured how easy it is for buyers to drive prices down of the business. Again, this is driven by the number of buyers, the importance of each individual buyer to the business, the cost to them of switching from the products and services to those of someone else, and so on. Therefore, the power of buyers is a threat for the company that defeats them to enjoy monopoly and hence to gain adequate profit. If company deal with few, powerful buyers, they are often able to dictate terms to the company.

Threat of New Entry
Power is also affected by the ability of people to enter the market. The business may have strong and durable barriers to entry, can preserve a favourable position and take fair advantage of it. The researcher considered Economies of scale, capital / investment requirements, customer switching costs, access to industry distribution channels to measure the threat of new entry. Existing competitors discourage potential competitors from entering into the industry by creating barriers to entry. They are created by undertaking some measures that are very costly for competitors to adopt. Such barriers may brand loyalty, absolute cost advantage, economies of scale, and government regulations   Here it is assessed that how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over the business, the cost of switching from one to another, and so on. The fewer the supplier choices we have, and the more you need suppliers' help, the more powerful your suppliers are. A company has to procure various types of supplies from suppliers such as raw materials, components, parts and other materials necessary for producing a product. If the suppliers are powerful they can raises prices of materials. Powerful suppliers are a threat to companies who have to buy at the price offered by the suppliers. In Bangladesh, in the paper industry the number of suppliers are is very few and they are very strong in bargaining prices. The major factors that determine the strength of the competition from substitutes are i) attractiveness of the prices of substitutes; ii) buyer’s satisfaction with the substitutes in terms of quality and others features; iii) the easiness to switch to substitutes.

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Supplier Power

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Threat of Substitution

When the competitors are offering equally attractive products and services the business most likely has little power in the situation. ▪ Competition is stronger when one or more competitors are dissatisfied with their market position and undertake other measures to win the battle for market share. ▪ Competition is usually stronger when demand for the product is growing slowly.Competitive Rivalry  The degree of rivalry between existing competitors has been measured here. . ▪ Competition is intense when it costs more to get out of a business and than to stay in the industry. ▪ Competition is stronger when customers’ cost to switch brands is low. ▪ Competition increases as the number of competitors increases. ▪ Competition is more intense when industry conditions encourage competitors to cut prices.

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