DLF Limited

Porter Five Forces Analysis

The Porter Five Forces Analysis is a corporate management method used to

assess industries and consider the fundamental profitability levers in a given
market.
Porter's Five Forces is a model that defines and analyses the five competitive
forces that form every market and aids in determining the industry's
shortcomings and strengths. Five Forces research is commonly used to assess
strategic policy by identifying an industry's structure. Porter's model can be
generalised to any sector of the market to better appreciate business competition
and increase a company's long-term profitability.
Porter's five forces are:

 Bargaining Power of Buyers

 Bargaining Power of Suppliers
 Rivalry among existing competitors
 Threat of substitute products
 Threat of new entrants

Managers at DLF Limited use Porter Five Forces to consider how the five
competitive forces affect profitability and to create a plan for increasing DLF
Limited competitive edge and long-term profitability.

Brief overview of DLF Limited

DLF Limited or DLF (originally Delhi Land and Finance) is India's
biggest real estate developer based in New Delhi, India. The DLF Group
was founded by Raghuvendra Singh in 1946. DLF developed residential
colonies in Delhi such as Shivaji Park ( which was actually its first one),
Rajouri Garden, Krishna Nagar, South Extension, Greater Kailash, Kailash
Colony and Hauz Khas. In 1957, with the passage of Delhi Development
Act, the local government assumed control of real estate development in
Delhi and banned private real estate developers.
Bargaining Power of Buyers

It is also low. As country still lacks adequate infrastructure facilities and

citizens have to pay for using public utilities. It is very difficult to predict the
direction and magnitude of price movement on real estate. One can only
assume that forces of demand and supply would always apply and price
movement will follow accordingly.

Bargaining Power of Suppliers

It is low, due the increase in the number of contracts or service providers,

margins have been stagnant despite strong growth in volumes. The number
of supplier is large so if one will increase the cost than there will be a shift
from one contractor to another.

Rivalry among the Existing Competitors

25% of the market shares is held by the DLF in the real estate sector. This
shows that the competition is very high in this sector with DLF unitech and
ansal being the major player. This may proves to be a threat to upcoming
players, as the established player are deep rooted in this industry. Though,
this threat shall not be faced by the DLF as it holds the major market share.

Threats of Substitute Products or Services

There are no substitutes to the basic product so there is not any threat of
substitute products.

Threats of New Entrants

Profitable market that yields high returns will draw firms’ attention. This
results in many new entrants, which will effectively decrease profitability.
But in real estate sector entry barrier are high because the working capital
requirements are high. Moreover, the existing
firms have the advantage over the others due to learning curve advantages.

This can be seen in the case of DLF which stated in 1946 and developed
DLF city in 1985and in 2008 they open first luxury mall. The gestation
period is very long so the investor will not be induced to invest.