MICHAEL PORTER’S

FIVE FORCES
MODEL
 Introduction
• Porter's five forces is a framework for the
industry analysis and business strategy
development developed by Michael E.
Porter of Harvard Business
School in 1979.
• He advocated structural analysis of
industries so that a firm is in better position
to identify its strength and weaknesses.
Michael Porter’s Five Forces
 The Entry of a New Entrant
Depends on following Entry
Barriers:
1. Expected Retaliation
2. Licensing Policies of the Government
3. Difficulty to Exit
4. Difficulty in Brand Switching
5. Patented or Proprietary Know how
 1. Threat Of New Entrant
• Profitable markets that yield high returns
will attract new firms. This results in many
new entrants, which eventually will
decrease profitability for all firms in the
industry.
• It also results in addition to production
capacity, large investment and securing
market share of existing firms.
2. Rivalry Among Competitors
• Firms are mutually dependent
• Moves of one firm may cause counter
moves and rivalry may become intense
resulting in decline in profits
• Changing prices, improving product
differentiation, creatively using channels
of distribution are some of the competitive
moves that are used in pursuing
advantage over rivals
 3. Bargaining Power Of Buyers
• Bargaining power of Buyers is a negative
feature for existing firms and new firms
• Bargaining power of Buyers may be high
due because of the following:
1.Buyers are few
2.They place large orders
3.They are sensitive to price rise
4.Alternate Suppliers are present
4.Threat Of Substitute Products
• Substitute means products which are
slightly different but satisfy the same
needs of the customers.
• A close substitute product constrains the
ability of the firms to raise prices
 5.Bargaining Power Of
Suppliers
SUPPLIERS ARE POWERFUL IF:

1.Suppliers are few and buyers too many

2.Products and services are unique
3.Substitutes are not available
4.The buyers buy in small quantity and
therefore is not important to the supplier
 SUPPLIERS ARE WEAK IF:
1.There are many Competitive Suppliers
and the product is standardized
2.Concentrated purchasers
3.There is credible backward integration
threat
SWOT ANALYSIS
Improving the quality of life of communities we serve.

Jamshedji Tata RATAN TATA

TATA Motors(1935)
 Strength
• Internationalisation strategy. The benefit is that Tata has been
able to exchange expertise. For eg. Daewoo acquisition.
• The company has a strategy in place for the next stage of its
expansion. Not only is it focusing upon new products and
acquisitions, but it also has a programme of intensive
management development in place in order to establish its
leaders for tomorrow.
• The company has had a successful alliance with Italian mass
producer Fiat since 2006. This has enhanced the product
portfolio for Tata and Fiat in terms of production and
knowledge exchange.
• Tata chairman Ratan Tata has a deep involvement in the
companies activities and design (the Nano and the Indica were
both his ideas).
 WEAKNESS
• The company's passenger car products are based
upon 3rd and 4th generation platforms, which put Tata
Motors Limited at a disadvantage with competing car
manufacturers.
• Despite buying the Jaguar and Land Rover brands,
Tata has not got a foothold in the luxury car segment
in its domestic, Indian market. Is the brand associated
with commercial vehicles and low-cost passenger
cars to the extent that it has isolated itself from
lucrative segments in a more aspiring India?
• One weakness which is often not recognised is that in
English the word 'tat' means rubbish. Would the brand
sensitive British consumer ever buy into such a
brand? Maybe not, but they would buy into Fiat,
Jaguar and Land Rover.
 OPPORTUNITIES
• 2004-Acquired Daewoo Motors USD $16 million .
• 2008-purchased the Land Rover and Jaguar brands
from Ford Motors for UK £2.3 million.
• Nano is the cheapest car in the World.
• Super Milo fuel efficient buses are powered by super-
efficient, eco-friendly engines. The bus has optional
organic clutch with booster assist and better air
intakes that will reduce fuel consumption by up to
10%.
• The new global track platform is about to be
launched from its Korean (previously Daewoo) plant
• Other competing car manufacturers have been in the
passenger car business for 40, 50 or more years.
• Sustainability and environmentalism could mean
extra costs for this low-cost producer.
• The price of steel and aluminium is increasing
putting pressure on the costs of production.
• Many of Tata's products run on Diesel fuel which is
becoming expensive globally and within its
traditional home market.