Sector Project 1: Manufacturing

 Bargaining Power of Buyers: It can be measured based on number of buyers in the business, the
availability of alternatives, switch over costs and the impact of buyers in the cost and quality.
With increasing purchasing power, a developing economy, and large available rural markets,
India's number of potential customers is huge. All the existing manufacturers and the proposed
new entrants can expect to grow enormously in those areas. However, with changing
preferences, increasing number of alternatives, and low switching costs, buyers enjoy the upper
hand.
 Bargaining Power of Suppliers: It can be evaluated based on the number of suppliers,
accessibility of substitutes for suppliers or vendors of manufacturers, influence of suppliers in
cost and quality and the industry in which supplier is operating. The manufacturing industry is
highly capital and labor intensive as a major part of the production cost includes labor cost,
material costs intensive advertising and market research activities. The suppliers available with
the manufacturers for the sourcing component ranging from domestic to global suppliers hence
the overall bargaining power with the suppliers in the present scenario is either moderate or
low.
 Rivalry among Existing Competitors: Industry rivalry among existing competitors can be
assessed by the number of competitors, product differentiation, industry growth rate,
substitution costs involved and the strategic stakes of the producers· The number of
competitors in the Indian manufacturing sector has increased over the year. At the same time
India is s price sensitive market with number of available alternatives and with low switching
costs, the manufacturers have to continuously innovate and differentiate, and these increases
the rivalry. Therefore, rivalry among Existing Competitors is high and attractiveness in the
industry may be measured as low.
 Threat of Substitutes Products: Higher availability of products from domestic and global market
with new products being launched, the threat of products in manufacturing segment is high. For
example, famous white ambassadors’ cars were substituted by fuel efficient newer cars.
Similarly, for most products in manufacturing the threat of substitution is high.
 Threat of New Entrants: The new entrants bring new capability and a yearning to gain market
share which adds pressure on current prices, costs, and the rate of investment needed to compete
in an industry. The threat of entry is determined by the extent of present entry barriers. The
barriers to entry comprise of the factors like Economies of Scale, Brand uniqueness, Product
Distinction, customer Switch Over Costs, Capital requirement; access to technology, raw material
and distribution channels; and Government policies.
Since India is competitive market profitability can be obtained by economies of Scale and that will
require Capital requirement. Also, the company needs to conduct in-depth research beforehand.
Therefore, the amount of implicit and explicit knowledge in order to design and manufacture a
product is high. Similarly, Brand identity, Product Distinction and Customer Switch Over Costs
affect the new entrants to market. Indian manufacturing is not competitive enough because of
the presence of small-scale unregistered manufacturing units while the registered manufacturing
sectors are low. Poor quality of transportation across all sectors along with high cost of power and
capital demotivates new manufacturers. However, with GOI promoting Make in India initiative
and relaxing norms for industries, the threat of new entrant is moderately on the higher side.