Benefits and Limitations of Porter’s Five Forces

Benefits Limitations
Using Porter's Five Forces Model No theory, including Porter's model, is able to
provides business owners with the incorporate all the various factors that can have
benefit of conducting a thorough an impact on a business. So, if someone is using
analysis of their competitors, enabling it, they should remember that it doesn't
them to assess and compare their own consider other things that could affect the
company's performance. So, they can company, like recent trends. It is crucial to
figure out how to make their business compare Porter's model with other theories
better or change some things to make when utilizing it. They should not only have one
more money. perspective. Instead, they have to think about
different theories when creating a plan for their
business.
Another great benefit of Porter's model This model suggests that every business will
is that it helps owners understand the have problems or weaknesses. There is nothing
overall perspective. So, they are able to that is exactly right for everyone. So, using it
make plans. They can choose what they might make owners not want to use it because
need to do next to make a good plan or they think there are too many things to fix to
keep their position in the industry. get the results they want. However, it is
important for them to keep in mind that
Michael Porter created this model so that they
can analyse the factors that can affect a
company. So, the company also has good things
that this way of thinking might not let them
know.
When running a business, individuals Finally, not every company can depend on
must interact with customers and Porter's Five Forces Model. Companies in
suppliers. So, they need to know how industries such as technology or fashion may
to talk to them to get good deals. As need to take into account additional factors
managers may already know, Porter's when their owners are evaluating them.
model looks at where suppliers stand in Therefore, sometimes the Five Forces Model is

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 relation to their company. So, it's a not enough for managers to fully understand
good way for them to learn more and the situation. They may need other theories to
use the information to make their plan help them see the whole picture and come up
better. with a successful strategy.
Table 1:Benefits and Limitation of Porter's Five Forces Model

Source: (Johnson, et al., 2014)

Benefits and limitations of BCG Matrix

Advantages Disadvantage
This is easy to do and to comprehend. The difference between high and low is
based on personal opinion.
Bigger businesses can employ it to find The BCG matrix sorts businesses into low
more customers and gain more knowledge and high categories, but sometimes they
and skills. It tells what a company will do in can also be considered average. So, the real
the future. So, the company can choose type of the business might not be shown.
how to manage itself.
The BCG matrix provides managers with a Using BCG analysis doesn't help managers
tool to evaluate the performance of their
consider the benefits that may occur when
services, products, or business units.
different parts of the product portfolio
work together.
Table 2: Benefits and limitations of BCG Matrix

Source: (Kumar, 2019)

PESTEL Analysis
Factors Description Impact
Political Political instability Negative
Government stability attracts investors Myanmar political stability is
for businesses and companies, so lack treated as the weakest, so
of stability will get a negative effect on businesses like City mart can’t
the company and on foreign function effectively.
investment in businesses like City mart, (Lindsay Maizland, 2022)
which needs regular stock fillings and
imports. (Clapp, 2023)
Rules, Regulations Positive

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 Changes in local laws, import/export As the City mart is local company
restrictions, licensing, taxation policies taxation is comparatively lower
can pose challenges in running the than its competitors which can
business in profit. But taxation for local give a competitive edge.
companies is 10%. (Ding, 2023)
(Thean-ngarm, 2018)
Economical Increase in Inflation Negative
A moderate inflation rate is needed in A higher inflation rate would
the economy for companies like CITY lead to a lower disposable
MART, As the inflation is high in income, and thus could lead to
Myanmar at around 15% to 18%, and it lower overall expanding, which
is rising each year. could harm businesses.
(The World bank, 2023) (Ding, 2023)
Economical support Positive
Business loans would also help in the Personal loans will convert into
development of company, With lower higher purchases and
to moderate interest rates. Bank consumption patterns by the
interests in Myanmar are moderate consumers.
and consistent. This in turn would lead (Myanmar’s economic recovery
to a boost in sales, consumption and slowed by high prices and
penetration of businesses like CITY shortages, 2023)
MART
(Myanmar Economic Monitor June
2023: A fragile recovery. Key Findings,
2023)
Social Demographics Positive
A higher portion of the younger A higher education means more
population is beneficial for CITY MART, talented, skilled, and
higher education in the population is knowledgeable persons in the
desirable for the employees and the talent pool for CITY MART.
higher education in customers leads to (Worldometer, 2023)
the higher purchasing power.
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 (Worldometer, 2023)
Technological Infrastructure Positive
Myanmar has a growing infrastructure Advancements in technology
with regards to technology; improved provides various metrics which
technological infrastructure also helps are helpful for City mart in
in attracting foreign direct investment, understanding the trends and
which in turn leads to further will make it easier for companies
development. to reach potential customers.
(Burgess, 2019) (Burgess, 2019)
Digitalization
Most of the population own a smart.
Positive
phone for internet accessibility, and
E commerce platforms, mobile
have access to computers and laptops
apps, online advertising
as well, so marketing and promotional
enhances the customer
strategies to be able to directly interact
experience
with consumers and gather feedback.
(Market Research Myanmar, 2022)
Environmental Sustainability Positive
CITY MART has a controlled and Consumers in the country, and
designated process of managing waste, across all markets are
and disposing waste in an increasingly preferring products
environmentally friendly manner. and services that are green
CITY MART has a company controlled
hydro plant on a small scale to help in
manufacturing operations.
(City Mart Holding Co., Ltd., 2022)
Climate related risks Negative
Yangon's climate is hot and humid, so As the climate is hot and humid,
City mart will have to take measures to City Mart have to ensure every
ensure that its products remain fresh product is fresh and of the
and of the highest quality, floods and highest quality
disasters can affect the company.
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 (Climate change knowledge portal,
2020)
Legal Labour Laws Positive
CITY MART has placed high importance Employees will get minimum
of the safety and health of its wages, working conditions which
employees, and continually strives to create a positive work
improve it further, CITY MART practices environment.
employment laws such as providing
them with minimum wages, and briefs
its employees about the same during
the recruitment process.
( ILO Liaison Office in Myanmar, 2022)
Skills and Training
HR department of CITY MART regularly
conducts workshops and training Positive
sessions for employees to engage Regular Training helps both
them, and make aware of the employees and the organization
employment laws along with other to work effectively.
legal formalities.
(City Mart Holding Co., Ltd., 2022)
Table 3: PESTEL

Porter’s Five Forces in City Mart

The factors established

consist of assessing
market attractiveness,
competitive
intensity, long-term profit
potential, and utilizing an
external analytical
approach.

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Figure 1: Porter’s Five Forces in City Mart

Source: (Bruin, 2016)

Rivalry Among Competitor (Low forces)

There are two rivals: Market Place and Grab & Go. The major competitor is Grab & Go. G&G
and Market Place stores, which provide comparable foods to City Mart, are its main
competitors. They all create both Asian and Western food. The final goods are the same.
Switching brands is also straightforward. City Mart faces a number of brand competitors,
which implies that its goods might be changed at any time. But City Mart is the top market
player in Myanmar with not many competitors, so there is low competition.

Threats of New Entrant (Average Forces)

Threats of new entrant is average because of the unfavorable political and economic
conditions. There is not much opportunity for foreign investment and local companies to
succeed. Even if new businesses start competing, City Mart can still compete with them
because it is a well-known and organized company worldwide.

Threat of Substitute (High forces)

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Threat of substitute is a big concern for City Mart company because they primarily focus on
selling food. They could be replaced not only by other similar companies but also by public
food services and other mart.

Barging Power of Suppliers (Low Forces)

City Mart uses regular materials and foods that are easy to buy, and it has many suppliers
too. So, it is not hard for City Mart to find other suppliers who offer similar prices. This
means that suppliers don't have a lot of power to negotiate with City Mart.

Barging Power of Customers (High Forces)

The company relies a lot on its customers, and there are many choices for them to change
to. City Mart Myanmar, as a company, attaches great importance to the preferences of its
customers. There are three big reasons why buyers have strong power in negotiations: lots
of similar options to choose from, it's easy to switch to another option without it being too
expensive or difficult, and there are many alternative choices available.

Ansoff’s Matrix

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 New

Market Development Diversification

Market research E-commerce
Supply chain expansion Food Services
Localized Market Financial Services

Ansoff's matrix

Market Penetration Product Development

Loyalty programs Private label brands
Store Expansion Innovation
Price Optimization Health and Wellness

Old
New
(Singapore Management University , 2019)

Market Penetration
“This involves increasing market share with existing products and premium products. This
includes finding new methods in accordance with move vertically with current production to
expand its market share. As Myanmar is highly price sensitive market, City Mart has variety
of products which have high and middle price, followed by suitable promotion activities.
CMHL also continuously penetrate the market with the ways of their customers' needs to
serve them better, By offering loyalty programs, expanding store locations, Optimising in
store customer experience City Mart can increase its market share within its existing market
by expanding it into various cities in Myanmar. (Castillerost, 2019)
Market development
As we know City Mart is market leader for supermarket and it has the franchisee FDI system
to reach new markets. As the firm is expanding into new markets; the market development
strategy typically has more risk than a market penetration strategy for CMHL but the
developments of new markets have been proven significantly successful for CMHL's core
competencies of its experience with a specific market segment. Therefore, CMHL is planning
to develop the market by constructing 20 more supermarkets within next two years.

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Researching customer preferences, Adapting products with the research, expanding into
New markets, and opening more stores” (Singapore Management University , 2019)
Product development
This involves developing new products and obtaining new customers in existing market.
CMHL is planning to open 20 more new supermarkets within two years. “Moreover, it is
recently opened high standard marketplace by city mart at 6.5 mile. In these coming new
supermarkets, it will also include art galleries, fashion jewellery shop, international luggage
brand shop, variety of restaurants apart from supermarkets. In addition, CMHL will try to let
customers using debit, credit cards apart from their provided member cards and others like
Introducing new products to existing customers develops products, Offering premium and
specialized products and offering innovative services in product deliver. Researching the
existing market to identify the product gap and reasonable prices” (Castillerost, 2019)
Diversification
City Mart is focus on diversifying the products to provide the multi choices that the clients'
attention fast and fresh food and guarantee a unique shopping experience. With the
diversification of offers on fresh food products and vibrant environment prevailing, City
Mart was quickly transferred to the most comfortable shopping destination. Such as
entering into food, beverage and e-commerce industry, researching Investors requirements,
Diversifying stores and expanding into Financial Services. (Castillerost, 2019)

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Ansoff Matrix
The Ansoff Matrix, sometimes known as the product and market Expansion Grid, is a tool
used by managers and analysts to plan and review growth strategies. It consists of a simple
four-box framework. The tool helps people understand how risky different growth
strategies.

Source: (Peterdy, 2022)

Marker Penetration
The organization aims to expand by selling more of its current products and services in the
same places, aiming to attract more customers in the same groups that already buy their
products. This can be achieved by increasing sales to existing customers or expanding the
customer base in current areas. The company plans to achieve this by aggressively
advertising and distributing their products in the same places they currently sell them. To
grow money, consider lowering prices, increasing advertising and product distribution
assistance, buying competitors in the same industry, and making small product
improvements, as these are the safest methods (Colin & Thomas, 2010).

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Market Development
A company's growth strategy involves utilizing a market development approach,
exploring new markets, utilizing existing resources, and making minimal
improvements to its products or services. This can be achieved by various customer
groups, including companies seeking to purchase previously exclusive products,
expanding into new regions or countries, and entering foreign markets (Peterdy,
2022).

Product Development

A product development strategy aims to increase a company's revenue by creating

new, highly sought-after products, which involves expanding the range of existing
products. To acquire items, one can invest in new and improved products, obtain
permission to create and sell others' products, purchase products with their own
brand, or collaborate with other companies to use their distribution channels or
brands. This involves risky moves in one area, similar to expanding into new markets,
and is riskier than entering an existing market (Colin & Thomas, 2010).

Diversification

Diversification is a strategy where a company aims to increase its market share by

creating new products or services and selling them in new markets. This is a risky
plan as it requires creating new products and finding new markets. Related
diversification involves connecting a company's current businesses with new
products or markets. Unrelated diversification, also known as conglomerate growth,
involves expanding into a completely different business. Diversification involves
spreading investments across different areas and is considered the riskiest option for
growth due to the need for two different moves (Stolt, 2010).

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SWOT

Strength Weakness
W1: Service is not provided 24/7.
S1: City Mart is a very successful company and the
top supplier.
W2: The cost of providing
products is a bit expensive.
S2: A strong reputation and loyal customer base
W3: To decrease consumer
greatly enhance a brand's or company's success.
complaints, the hiring and
S3: It is possible to use a cashless system.
selecting process needs additional
S4: Get more customers to participate in City
regulations and guidelines.
Rewards.

Opportunities Threat

Political instability

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