INTERNAL & EXTERNAL FACTORS THAT AFFECT THE PROCESS OF MANAGEMENT OR FIVE FORCES ANALYSIS

Porter’s five forces model of competitive analysis is a widely approaches for developing strategies in many industries. The intensity of competitive among firms varies widely across industries. According to porter the nature of competitiveness in a given five forces.

RIVALRY AMONG COMPETITIVE FIRMS
The power force among five completive forces. The strategies adopt by one firm can by successful only of those provide competitive edge over strategies adopted by the rival firms. When one rival firm adopt a strategy, other firm also follow some strategies to move in same way such as

• Lowering price
• Enhancing features
• Adding features
• Providing services
• Extending warranties
• Increasing advertising

The intensity of rivalry among firms increases, as the number of firms or competitors increased. Due to rivalry among firm, rate of return decline and sometime reach at that point that an industry become inherently unattractive.(Surf washing power of various firms)

POTENTIAL ENTRY OF NEW COMPETITORS

Whenever, new firms can easily enter a particular industry, the intensity of competitiveness among firm’s increases. No doubt, there are various barriers to entry such as;

• The need to gain economics of scale quickly
• The need to gain technology & specialized know how
• The lack of experience
• Strong customer loyalty
• Strong brand preference
• Large capital requirement
• Govt. regularly policies, tariff
• Lack of access to raw material
• Possession of patents
• Undesirable locations
• Counter attack of firm
• Potential saturation of the market

Despite all that barriers, new firms sometime enter into an industry with high quality & low price. The strategist’s job is to identify potential new firm entering into industry and market so that keeping in view their strategies movement, new policies are made.

DEVELOPMENT OF SUBSTITUATE PORDUCTS

In many industries firms are n close competition with the producer of substation products in other industries. Competitive pressures are arising due to substitute products because as price of substitute products decline customers switch towards that.

The competitive strength of substitute products can best measured by the market shared obtains those products as well as those firms’ plans for increase capacity and market penetration.

BARGAINING POWER OF SUPPLIER

When there are large number of suppliers then bargaining power of suppliers affects the intensity of competition in an industry because only a few good substitute raw material and the cost of raw material is especially costly.

Therefore, it is better that both supplier and producer assist each other as to ;

• Reasonable price
• Improved quality
• Development of new services

Firms should have to adopt a back ward integration of suppliers. This strategy is effective when suppliers are unreliable, and too costly or not capable of meeting the firm’s needs on a consistent.

BARGAINING POWER OF CONSUMERS

Bargaining power of is also higher then the products being purchased are standard or undifferentiated when this the case, consumers can often negotiate;

· Selling price

· Warranty

· Coverage & accessory

· Package to a greater extent.

Rival firm also offer extending warranties and special services in order to gain loyalty.

CONCLUSION

After discussion the porter’s five forces model. We can judge the importance of these