Competitive Analysis: Porter's Five Forces Model

 

• Rivalry Among Competing Firms

• Potential Entry of New Competitors

• Potential Development of Substitute Products

• Bargaining Power of Suppliers

• Bargaining Power of Consumers

 

Every single organization varies according to its specific industry in which they operate, still Porters five forces, is a perfect and very useful model that provides information and special analysis through every single competitor, creating effective strategies depending on the knowledge acquired, giving the possibility of a greater competitive advantage towards the business itself. Strengths and weaknesses are important facts which have to be investigated, researched and kept in mind always.

 

1. Rivalry Among Competing Firms:

Every single company needs to have an advantage over the competition, an advantage that’s going to generate benefits, create values, loyalty of the customers as well as confidence and more. This rivalry among competitors is the idea of making clients desire, want or need and prefer our products or services rather than those that competitors can offer.

With our research, we found many aspects that are crucial to us. In order to make a difference in our company and gain that advantage, we discovered that we must make a change towards other companies which are also in the accessory industry. “Do it” is a brand which has what it needs to attract customers(born in 2004), this and few others have their own style, that’s why we need to succeed on our designs and difference among those competitors. We also can use technology as a way to attract and persuade people to enjoy and visit our brand. As many other companies do, we should take a step ahead and advance towards what could be a benefit for our business.

 

2. Potential Entry of New Competitors:

It is very important to understand how easily it is for a new organization to enter into the same industry. With this second factor, which Porter established as the potential entry of new competitors, we may determine how simple it might be for new competitors to get in the same business, making it even harder to work as competition gets even tougher. When the level of competition is high, customers have more to choose. This Makes Company’s think twice before having the idea of entering to the same industry, recognizing the challenges and difficulties that the company has to deal with.

Colombia has many companies that want to show the specialties of the nation, enjoying everything that has to do with the country. This means that in the case of accessories, we can say that the potential entry of new competitors is significant and very complicated in this industry. Checking prices, quality, needs and more of what the customer requires can help us achieve a great difference between the competition, and also for those new businesses that want to enter to the same type of industry.

 

3. Potential Development of Substitute Products:

Customers tend to substitute products or services for something better, thanks to porter’s five forces, we can manage more specifically how and why this occurs. There are many factors that apply for the reason of these substitutions or changes, some of them are the alternative price and quality, which is when the prices and quality are similar, then customers tend to choose the cheapest one with better or less quality (depends on customer’s preferences). Legislative effects, meaning that all laws, rules and regulations that have to be followed in the industry, are critical factors that puts our company into test, as all competitors must follow them as well. Having an advantage towards these rules, can give us a wider approach to what’s needed in order to be the best in our type of industry.  Fashion and trends, are very important aspects as well, that have to be investigated and improved always. It is always changing in the external environment. This affects our business, as we need to spend time on what the customer wants and always keeping in mind that we have to develop something better, staying in the level that our clients want, modern.  These and more aspects can help us sustain a perfect level of demand and loyalty on our customers, evading our clients to change or search other company’s products.

 

4. Bargaining Power of Suppliers: Just as for all the members of our industry, the quantity of suppliers that reach the objective prices and quality are very few. Besides this, as specifically on the recycling industry, there are even fewer companies specialized in processing correctly wastes so they can be sold to any interested company or person. Because of this, is that the environment that we want to get in has the element of weakness respect of how much you can negotiate terms with a supplier. As the companies do not have much option in which the can choose. Therefore, it must be considered that if we are going to be part of this industry we must be sure that we can create and develop a good relationship with certain suppliers, in order to not be later affected by any possible obstacle related to raw materials and machinery needed for the company’s economic activity.

 

5. Bargaining Power of Consumers: The accessories industry is one in which many big and small companies are involved. This because of how “easy” it can be to create a product and thanks to tools to be known like the e-commerce. Because of this variety and quantity of involved firms is that it is difficult to get costumers attention. But beyond that, it is difficult to impose terms on clients, as they can easily substitute one firm for another. Thanks to this, costumers have gotten a huge bargaining power. While always having an attractive plan b round the corner, they also have many possibilities to get coordinated between them as a whole because of the Internet, consequently they can help getting a brand to the top, as they can generate that it fails. Because of this factor it is important to consider that in this industry it is needed a huge investment in costumer study and attention, moreover it is important to create and organization that can evolve everyday so it does not get left behind by the market. Furthermore it is imperative to consider that the industry we want to get in trades with products in their majority unnecessary for the daily basis, which makes the market even smaller, less opportunities to succeed need to be fought over, and that requires a lot of the companies resources, giving the chance of having an unprofitable company.

 

Bibliograpgy:

Arline, K. (February 18, 2015). Porter's Five Forces: Analyzing the Competition. business news daily

kpmg. (2013). Doing business in colombia. KPMG.com.co.