Porter Five Forces Model Commerce Essay

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Michael Porter's five forces model is a measure to determine the attractiveness and degree of competition of a particular market or an industry. This model is based on five forces which are:

Threat of New Entrants

Threat of Substitutes

Bargaining Power of Customers

Bargaining Power of Suppliers

Competitive Rivalry in Industry

During our research regarding the Super Asia, we have also used this model to understand the corporate strategy adopted by the organization.

Threat of New Entrants

Super Asia is facing the biggest risk from the new entrants in the home appliances industry as these can be proved potential competitors for the company. These potential competitors can badly dent the Super Asia in terms of its market share, which it can lose. New entrants are entering in this field due to two reasons:

Attractive Returns

Foreign Brands

Attractive Returns

Home appliances industry is very attractive and profitable as compared to other fields. That fact is encouraging the many investors to invest their money in this field as it can give them attractive rewards for their finances.

Foreign Brands

Foreign brands are also a threat for Super Asia. Many foreign countries like Mitsubishi, LG, Haire, and Sony etc. are also launching their products in Pakistan now. These foreign brands are high in quality and provide many extra features to consumers. Therefore, these brands can badly affect the market share of Super Asia.

Threat of Substitutes

A substitute is something which satisfies the same need. Super Asia is also facing a threat from the increasing number of substitutes in the market. The biggest threat is perhaps from Chinese products which are serving as an alternative option for the consumers of Pakistan. These products are cheap in price and people can easily afford them.

Bargaining Power of Customers

Buyers are very important for any organization because they become the end users of the products of the company by consuming those products. Bargaining power of the consumers can heavily affect the position of a company in the market. Super Asia is going through the same kind of situation. In market many substitutes are available for home appliances products, especially the foreign brands and Chinese products, as a result the bargaining power of consumer remains high and consumer insists to decrease the prices of the Super Asia products. If company does not do so it can easily lose its market share as consumers will switch to some other brand.

Bargaining Power of Suppliers

Bargaining power of suppliers can also create problems for any organization. This threat arises when there are very few suppliers in the market or when the company is dealing in unique input materials for the manufacturing of their products. In such case the bargaining power of supplier will remain high and he will try to squeeze the maximum profits.

The research on Super Asia shows that it is effectively controlling its suppliers by creating equilibrium between the supplier's powers and the interests of the company. For this purpose, it is signing long-term treaties with its suppliers regarding the provision of the raw-materials, which prevent the company from the major fluctuations in the prices of the materials.

Competitive Rivalry in the Industry

Competitive rivalry determines the intensity of the competition in the markets. As a result companies can engage in activities like price wars such as reduction in prices, making more investments to bring the innovation and new products to gain the competitive advantages, and indulging in intensive sales promotion.

In case of Super Asia, the degree of competition is rising each day as many competitors like Dawlance, LG, Sony and Haier etc. have entered in the market. In order to cope up this challenge it is focusing to bring more innovative home appliances for the consumers to gain the edge over its competitors.

Porter's Five Forces Model

Boston Consulting Group Matrix

BCG Matrix is a tool which was developed in 1970 by Bruce Henderson to facilitate the business organizations to analyze their business portfolios or product lines. BCG matrix actually indicates the relationship between the growth rate and market share. This tool consists of 4 main elements:

Stars

Cash Cows

Question Marks

Dogs

During the course of our project about Super Asia, we also used this methodology to measure the attractiveness of various products of the company. We concluded that there are certain products which need heavy investments such as microwave ovens and air conditioners etc. rather than washing machines and spinners.

On the other hand, company is also introducing various new products to expand its business portfolio e.g. Super Asia has recently launched insulation sheets which is a good step towards the expansion of the organization.

Stars

Those products which have high market growth rate and high market share are considered as stars for the company. In case of Super Asia, fans are the stars for the company as these have captured the largest market share and creating more returns for the organization.

In order to maintain its status in the market, Super Asia needs to make more investments in those products so that more innovative and quality products can be provided to consumers.

Cash Cows

Those products which have low growth rate but high market share are considered as cash cows for the company. When we talk about Super Asia, washing machines and spinners are included in this category. These are the mature products for the company and hence they need less investment as compared to star products of the company.

Super Asia should mint money by managing these products carefully and it can use the money for the improvement of star products.

Question Marks

Those products which have high growth rate but less market share are called the question marks of the company. For Super Asia water dispensers, room coolers are the question marks. It means that these products have potential to grow in the market but only few rectifications are needed regarding their promotion and selling.

Dogs

Dogs are the products which have low growth rate as well as the low market share. For Super Asia microwave ovens and air conditioners fall in this category, the reason behind this the entry of many new international brands in market such as LG, Mitsubishi etc.

Super Asia should minimize these kinds of brands as they can prove expensive for the company by becoming a white elephant.

Growth

RateBCG Matrix of Super Asia Company

Market Share

Employee Satisfaction Surveys

Performance management is an essential way to measure the productivity and efficiency of the labor and other workforce at the workplaces. It helps the management of the organization to be well aware of the skills and capacities of their employees.

Employee satisfaction survey is such a tool to gain that purpose. For that purpose, organizations prepare various questionnaires comprising the issues related to workers. These issues include benefits, compensations, working hours, communication issues, physical work safety and conduct of the employees with each other etc.

Super Asia also conducts various surveys to gauge the satisfaction level of its employees. A sample survey is attached with the report (Appendix-I). The Country Manager of Super Asia, Mr. Syed Ather Ali Jaffery believes that employees are the engine of his organization; hence, it is necessary for the Super Asia to hear their concerns and try to resolve them as soon as possible.

According to him, a healthy organization can only be formed when workers are satisfied with the policies of the company. Their views and ideas are considered before taking any action or making any decision. He is certain that such steps can make the employees more loyal with the organization because they are listened and valued by the top management.

He further added that when an organization gets the feedback of the employees, it also gets to know its own strengths and weaknesses. They provide their feedback regarding the training and development programs for employees, policies and procedures, working conditions, and behavior of the top managers etc. Then in the light of the feedback and information provided by the personnel, organization can make many constructive improvements, which will bring benefits not only for the organization but also for the employees as well.

According to Mary Kay Ash, an American female entrepreneur,

"People are definitely a company's greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps."

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