Name: Nagaraju

Roll No.:1901095

The Five Competitive Forces That Shape Strategy:

What is Strategy?
The term strategy refers that a plan or action is taken to achieve long term or
short-term goals under some conditions in business or in present daily life. The
strategy describes how the goals will be achieved by the resources.
Now we want to discuss strategic management the what is strategic
management?
 Strategy management involves setting the objective, analysis of the
competitive environment, analysing the internal organization, evaluating
the strategies, and ensuring that top management will overcome the
strategies across the organization.
 Strategy management provides overall direction by developing the plans
and policies to overcome the organization's objectives which are
maximizing the profits and minimizing the cost.
To achieve the organization's goals there will be one process that process was
a strategic management process which means defining the organization's
strategy.
 It is also defined as the process in which the manager makes a choice of
a set of strategies for the organization that will enable it to achieve
better performance.
 To overcome the problems in the business or organization managers will
follow competitive forces that will shape the strategy.
Now we want to know about the competitive forces what are competitive
forces?
 For this firstly we want to know about our competitor and how their
product or services and marketing strategies affect you is critical to our
survival.
 To overcome this problem and analysis our competition and our
standing in our industry this five-force model will help users.
 These factors determine whether or not a business can be profitable in
relation to other businesses in the industry.
 Using these Five Forces in conjunction with a SWOT analysis will help
you understand where your company or business fits in the industry
landscape.
Porter theorized that understanding both the competitive forces at play and
the overall industry structure are crucial for effective, strategic decision-
making, and developing a compelling competitive strategy for the future.

In Porter's model, the five forces that shape industry competition are:

1. Competitive rivalry
2. The bargaining power of suppliers the bargaining power of customers
3. The threat of new entrants
4. The threat of substitute products or services

This is the competitive five forces that shape strategies in organizations or

industries to obtain their objectives.
1. Competitive rivalry:
This force examines how intense the competition is in the marketplace. It
considers the number of existing competitors and what each one can do.
Rivalry competition is high when there are just a few businesses selling a
product or service, when the industry is growing and when consumers can
easily switch to a competitor's offering for little cost. When rivalry
competition is high, advertising and price wars ensue, which can hurt a
business's bottom line. 
For example:
JIO makes a competitive rivalry in the communication industry.
It came with huge publicity that there are giving free internet service by buying
their SIM. They aim at providing internet service to the rural areas of the
country offering little cost. Customers' low switching cost intensifies the
competition in the industry.

2. The bargaining power of suppliers:

This force analyses how much power a business's supplier has and how
much control it has over the potential to raise its prices, which, in turn,
lowers a business's profitability. It also assesses the number of suppliers of
raw materials and other resources that are available. The fewer supplier
there are, the more power they have. Businesses are in a better position
when there are multiple suppliers.
For example:
After completing one year the JIO founder Mukesh Ambani said that Jio was
soon going to be a paid affair. No more free data, no more Jio's free bouquet of
services why because more loyal customers will create bargaining power to
suppliers.

3. The bargaining power of customers:

This force examines the power of the consumer, and their effect on pricing
and quality. Consumers have power when they are fewer in number but
there are plentiful sellers and it's easy for consumers to switch. Conversely,
buying power is low when consumers purchase products in small amounts
and the seller's product is very different from that of its competitors.
For example:
A contractor was buying a huge amount of cement from a cement supplier
then the buyer can bargain for reduces the total amount this time the buyer's
bargaining power was high.

4. The threat of new entrants:

This force considers how easy or difficult it is for competitors to join the
marketplace. The easier it is for a new competitor to gain entry, the greater
the risk is of an established business's market share being depleted. Barriers
to entry include absolute cost advantages, access to inputs, economies of
scale, and strong brand identity.
For example:
when Patanjali came into the market it was new for competitors. When there
is in the market there was a threat with the competitors, but it overcomes the
problem with its good strategy that attracting the customer with low prices
and good quality so that they became one of the best companies in the FMCG
industry.

5. The threat of substitute products or services:

This force studies how easy it is for consumers to switch from a business's
product or service to that of a competitor. It examines the number of
competitors, how their prices and quality compare to the business being
examined, and how much of a profit those competitors are earning, which
would determine if they can lower their costs even more. The threat of
substitutes is informed by switching costs, both immediate and long-term,
as well as consumers' inclination to change.
 For example:
How the Indian manufactures are depending on the china for cheaper
products. When the price was high definitely the demand was low so the
buyers will shift from one supplier to others. Otherwise they will see for quality
products.
Advantage of five competitive forces that shape strategy:
 Five force is a frame work for analyzing a company’s competitive
environment.
 The number and power of a company's competitive rivals, potential new
market entrants, suppliers, customers, and substitute products influence
a company's profitability.
In this way we can discuss the five competitive factors that shape strategy
for forecasting the profits in an organization.