Porters Five Forces Argumentative Essay Example

style="text-align: justify;">Profitability of an industry is known by the rivalry between the particular firms of that industry. Almarai, Lacnor, Al-Ain, Safa, Al-Rawabi are all rivals to each other. In order to increase profit and market share these firms must give their customers promotions to also increase their demand. If Almarai puts a buy 1ltr of milk and get a yogurt free and other firms don’t give any promotions then Almarai will be in more demand as more customers would like to get a free yogurt which Almarai provides rather than nothing from others e. g. Lacnor, Al Rawabi etc. Thus, Almarai will increase its sales; it will be more in demand and will increase its percentage in the market shares.

Where the market growth is slow many firms compete with each other for maximum share in the market. Exit barriers increase the difficulty level for existing firms to quit competing in the industry. In my views, in any industry there will be rivalry among the firms and if there are more firms then there will be more competition for increase in market share. The threat from substitute products This is also a threat because customers get what they want the easier way.

If Almarai produces fresh milk which doesn’t last long and costs more and Lacnor produces long life milk which is cheaper, then the people would tend to buy Lacnor as they can keep it for months while Almarai’s fresh milk would last for just a couple of days. Whereas if Almarai produces powder milk and it is relatively cheaper than any other product in the market then customers would go for

the powder milk. From my point of view, I would say that substitute products can change customer opinions which can be a threat to the firm’s market share.

Conclusion

Michael Porter has given an effective and efficient tool for analyzing competition in the industry and allows managers to shape their responses to external factors affecting their business to remain competitive and increase profitability and market share. Almarai’s case study demonstrates how an FMCG company can survive in a cut throat competition environment. Such analysis can determine the direction of business’s future growth.

References

1. Almarai, Anon, <http://Almarai. com/about-us/> [6/10/2012]
2. Business Essentials, (2010), London, BPP Learning Media ltd. Harvard Business Review, (2008),
3. The Five Competitive Forces that Shape Strategy, Cambridge, <http://hbr. org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1> [6/10/2012]
4. Mind Tools, Anon, Porter’s Five itve For, Assessing the Balance of Power in a Business Situation, <http://www. mindtools. com/pages/article/newTMC_08. htm> [6/10/2012]
5. Quick MBA, Anon, Porter’s Five Forces; A Model for Industry Analysis, <http://www. quickmba. com/strategy/porter. shtml> [6/10/2012]