Porter’s Five Forces Argumentative Essay Example

an attractive price for consumers since pricing significantly influences purchasing power. Failure to provide sufficient utility value may result in a loss of purchasing customers. Additionally, supplier power poses a significant threat since suppliers can control material prices through cartels or strict controls that negatively impact industry performance.Companies must be cautious of strict labor laws and unionized employees, requiring them to treat their workers fairly and equitably. Some companies combat supplier power by expanding their supply chain or implementing generic strategies like raising product prices to compensate for raw material costs – known as differentiation strategy. Another way to strengthen the business is through focus. Due to high material expenses, some companies concentrate on improving product quality and can then increase prices without negatively affecting customers – a differentiation-focused strategy. Additionally, new businesses face barriers when entering the market with similar products, which could cause established companies to lose profits and market share. To counteract this threat, firms have adopted cost leadership approaches that reduce production expenses while increasing operational efficiency resulting in lower-priced products with maintained profits; dissuading potential competitors from entering the market (Staw et al., 1983). Industry rivalry poses another force that threatens businesses since competitors may take over the market share. Companies should reduce prices temporarily when confronted with such threats but return back to normal once competitors exit the segment of the market they operate in.In order to safeguard their patents and copyrights, companies must ensure that their headquarters are not accessible to outsiders and provide adequate compensation to employees in order to prevent them from leaving for competing firms. Economists assert that the risk of substitutes arises when a

substitute's price is likely to impact demand for a particular good. Due to the price elasticity of goods, businesses face an arduous task of maintaining sustainability in the future. To overcome this challenge, they adopt differentiation as a key strategy in their frameworks, thereby reducing the threat's strength and danger and fostering customer loyalty towards the uniqueness of their products.