Introduction
As the business environment is changing and developing rapidly, making thorough business strategies seems to be critical for firms of different industries to cope with the competition. To acquire comprehensive business strategies, it is significant for firms to analyze and evaluate the competitive environment that they are or would be involved in. Porter 's competitive forces model has been a tool served to reveal the industry structure and enable firms to be aware of their own position (Porter 2008, p. 80). This essay will present the essentials of the model, followed by the implementation in lutein products industry.
The five forces model
Porter 's five competitive forces was first proposed by Michael E. Porter in 1979. According to Porter (1979, p. 137), an industrial competitive structure could be defined by five forces including the existing industrial rivals, the threat of substitutive …show more content…
Basically, among the buyers, the number of retailers, such as Chemist warehouse, Terry White chemist, Priceline, exceeds that of end users in the Australian lutein products market. The power of these retailers is increasing, which puts pressure on the suppliers. Another reason is that there are various related lutein products that customers can switch to. Therefore, the price of the product could be forced down. Although consumers used to accept the higher price as the guarantee of quality, the market has been altering gradually.
It seems that new entrants of this industry could be increasing, because the health care products market is promising and more individuals pay attention to protect eyes. However, there exists some barriers for new companies to enter the market. For example, adequate capital is essential for companies to enter the market, as well as research ability which depends on skilled employees. Thus, the new entrants is less threatening among the lutein
As the business environment is changing and developing rapidly, making thorough business strategies seems to be critical for firms of different industries to cope with the competition. To acquire comprehensive business strategies, it is significant for firms to analyze and evaluate the competitive environment that they are or would be involved in. Porter 's competitive forces model has been a tool served to reveal the industry structure and enable firms to be aware of their own position (Porter 2008, p. 80). This essay will present the essentials of the model, followed by the implementation in lutein products industry.
The five forces model
Porter 's five competitive forces was first proposed by Michael E. Porter in 1979. According to Porter (1979, p. 137), an industrial competitive structure could be defined by five forces including the existing industrial rivals, the threat of substitutive …show more content…
Basically, among the buyers, the number of retailers, such as Chemist warehouse, Terry White chemist, Priceline, exceeds that of end users in the Australian lutein products market. The power of these retailers is increasing, which puts pressure on the suppliers. Another reason is that there are various related lutein products that customers can switch to. Therefore, the price of the product could be forced down. Although consumers used to accept the higher price as the guarantee of quality, the market has been altering gradually.
It seems that new entrants of this industry could be increasing, because the health care products market is promising and more individuals pay attention to protect eyes. However, there exists some barriers for new companies to enter the market. For example, adequate capital is essential for companies to enter the market, as well as research ability which depends on skilled employees. Thus, the new entrants is less threatening among the lutein