Porter’s Five Forces/ Strategic Analysis of The Mang

Inasal

THREAT OF NEW ENTRANTS:

● Because the sector is profitable, many new players will strive to enter the market.
However, the additional entrants will eventually reduce total industry profitability. As a
result, it is vital to prevent new entry into the business. The various factors define the
amount of threat to new entrants:
○ Copyrights and patents are examples of entry barriers.
○ Capital is in short supply.
○ Profitability in the industry.
○ Customer loyalty to well-known brands.
○ Product uniqueness.
○ Government policies are limited.
○ The expenses of switching.
○ Supplier and distribution access.
○ Customer loyalty to well-known brands.

THREAT OF SUBSTITUTES:

● This defines the company's threat. If the services and goods are not up to the mark,
customers can utilize substitutions and alternatives that require little more work and make
little difference. For example, Aquafina in place of tap water, and Pepsi in place of Coca
Cola. The following are some of the possible reasons why customers switched to
substitutes:
○ Substitute price performance.
○ Buyer switching costs.
○ Market replacement products are available.
 ○ Quality reduction.
○ There is a close substitute available.

DEGREE OF INDUSTRY RIVALRY:

● The less money and resources necessary to enter any business, the more new rivals and
effective competitors there will be. It will also weaken the business's standing. The
following are some of the probable elements that will impact the company's competition:
○ Advantage in the marketplace.
○ Constant innovation.
○ Position of long-term competitive advantage.
○ Advertising Level.
○ Strategy for competing.

BARGAINING POWER OF BUYERS:

● It is concerned with the power of customers to reduce pricing. It mostly comprises a

client's significance and the amount of cost if a customer switches from one product to
another. If there are too many options, buyer power is high. And buyer power is minimal
if there are fewer choices and switching opportunities. Customers' purchasing power will
be influenced by the following factors:
○ Negotiating power.
○ A buyer's switching cost.
○ Price sensitivity of buyers.
○ The product's competitive edge.

BARGAINING POWER OF SUPPLIERS:

● This relates to the supplier's power to raise and lower pricing. If the corporation has few
choices for suppliers, it will be forced to acquire raw materials on the supplier's
conditions. However, if there are several suppliers to choose from, suppliers have few
 negotiating leverage and the organization does not incur substantial switching costs. The
following are possible suppliers' negotiating power influencing factors:
○ Differentiation of input
○ Impact of cost on uniqueness
○ Distribution center strength
○ Enter the availability of an alternative.

● Industry Competitors (Intensity of Rivalry):

○ New Entrants - Threat of the new entrants
○ Suppliers - Bargaining Power of Suppliers
○ Buyers - Bargaining Powers of Buyers
○ Substitutes - Threat of substitutes
● New Entrants - Threat of the new entrants
○ Barriers to Entry
■ Scale economies
■ Product uniqueness
■ Brand recognition
■ The expense of switching
■ Obtaining access to distribution channels
■ Financial requirements
■ Access to cutting-edge technologies
■ Effects of experience and learning
○ Government Action
■ Enterprise security
■ Enterprise regulation
■ Policies that are consistent
■ Capital flows between nations
■ Customs fees
■ Currency exchange
■ Foreign control
■ Competitors are given assistance.
○ Rivalry Among Competitors
■ Competition concentration and balance
■ Industry expansion
■ Cost of fixed (or storage)
■ Product uniqueness
■ Increasing internal capacity
■ Costs of switching
■ Strategic corporate interests
 ○ Barriers to Exit
■ Specialization of assets
■ Exit cost is a one-time expense.
■ Strategic alliances with other businesses
■ Emotional limitations
■ Government and societal limitations

● Suppliers - Bargaining Power of Suppliers

○ Power of Suppliers
■ Number of significant suppliers
■ Substitutes for the supplier's products are available.
■ Supplier's product differentiation or switching cost
■ Forward integration threat from suppliers
■ Backward integration poses a threat to the industry.
■ Contribution of the supplier to the quality or service of industrial goods
■ Suppliers contribute to the total industry cost.
■ Profitability of the industry to suppliers

● Buyers - Bargaining Powers of Buyers

○ Power of Buyers
■ Quantity of significant purchases
■ Substitutes for industry items are available.
■ Buyer switching expenses
■ Backward integration by the buyer
■ Forward integration poses a challenge to the industry.
■ Contribution to the buyer's product quality or service
■ The industry's total buyer cost contribution
■ Profitability of the buyer

● Substitutes - Threat if substitutes

○ Availability of Substitutes
 ■ Close replacements are available.
■ Costs of switching for users
■ Replaces the profitability and aggressiveness of the producer
■ Price-value substitution

● The competitive scenario

○ Based on the above analyses, we may deduce the following scenario of fast-
food sector competitiveness:
■ Buyers' strong negotiating power: a disadvantage for a fast-food restaurant
■ Suppliers' low bargaining power: an advantage
■ A disadvantage of high competitive rivalry among rivals
■ A disadvantage is the high threat of alternative items.
■ Low threat of new entrants: an advantage