Portes Five forces
1. PORTER’S FIVE FORCES MODEL
Porters five forces, as a powerful analysis tool, enables managers in corporations to analyze the current situation of their industry in a structured, easy-to-understand way. From a strategic management perspective it is useful for managers in any organization in the same industry or sectors to understand the five competitive forces acting on and between organizations in the same industry and or sector since this will determine the attractiveness of that industry and the way in which individual organizations might choose to compete.
Porter identified five factors that act together to determine the nature of competition within an industry. These are the:
• Threat of new entrants to a market
• Threat of substitute products
• Bargaining power of customers (“buyers”)
• Bargaining power of suppliers
• Degree of competitive rivalry
These forces act in the following way with regards to industry
1.1 The Threat of entry
The barriers of entry are factors that need to be overcome by new entrants if they want to compete in an industry. The tyre manufacturing industry is an oligopoly industry.
At Apollo Tyres, this force is of very little significance. The manufacturing plant is highly automated and the manufacturing equipment is of a proprietary nature. With the amalgamation of the two company’s experience, and the extended research and development being afforded from our international allies, the quality of the product has increased.
With Apollo Tyres being from India, natural rubber, an essential component in tyre manufacture, is sourced from their own plantations at a drastically reduced price compared to the open international market. New manufacturing equipment is also sourced from their own machine building division. This equipment is designed around their process, subsequently reducing manufacturing time, costs and ensuring quality. This innovation has led to the product units being produced at a lower price, hence
Porters five forces, as a powerful analysis tool, enables managers in corporations to analyze the current situation of their industry in a structured, easy-to-understand way. From a strategic management perspective it is useful for managers in any organization in the same industry or sectors to understand the five competitive forces acting on and between organizations in the same industry and or sector since this will determine the attractiveness of that industry and the way in which individual organizations might choose to compete.
Porter identified five factors that act together to determine the nature of competition within an industry. These are the:
• Threat of new entrants to a market
• Threat of substitute products
• Bargaining power of customers (“buyers”)
• Bargaining power of suppliers
• Degree of competitive rivalry
These forces act in the following way with regards to industry
1.1 The Threat of entry
The barriers of entry are factors that need to be overcome by new entrants if they want to compete in an industry. The tyre manufacturing industry is an oligopoly industry.
At Apollo Tyres, this force is of very little significance. The manufacturing plant is highly automated and the manufacturing equipment is of a proprietary nature. With the amalgamation of the two company’s experience, and the extended research and development being afforded from our international allies, the quality of the product has increased.
With Apollo Tyres being from India, natural rubber, an essential component in tyre manufacture, is sourced from their own plantations at a drastically reduced price compared to the open international market. New manufacturing equipment is also sourced from their own machine building division. This equipment is designed around their process, subsequently reducing manufacturing time, costs and ensuring quality. This innovation has led to the product units being produced at a lower price, hence