PORTER’S 5 FORCES

1. Bargaining power of suppliers of Mahindra Tractors-

In this sector, businesses frequently have long-standing relationships with their suppliers, which gives them
assurances on the punctuality and quality of major inputs. Around 650 to 450 suppliers give different inputs to
Mahindra Tractors to enable them to manufacture tractors. Steel suppliers, tyre providers, engine makers
(equipment), and other suppliers are some of the key players in this industry. CEAT is the supplier of the tyres.
Mitsubishi supplies the engines (horsepower from 18HP to 32HP). Mahindra Steel provides the Steel (which is
a sister company). And PPG Asian Paints is the supplier of the paints. Because there are numerous suppliers in
this industry, switching costs are lower and hence supplier power is lower.

2. Threat of substitute products and services –

If the threat of substitution is significant, Tractor Mahindra must continuously invest in R&D to avoid losing
market share to rival companies. The only practical alternatives to tractors are human labour, bulls, and power
tillers, however these alternatives perform poorly. Tractors outperform them in terms of productivity, time
savings, and efficiency. And when it comes to tractors produced by the competitors, they charge a high rate on
their tractors. As a result, the risk of substitution is minimized. These allow us to draw the conclusion that there
aren't many available alternatives in this market.

3. Threat of new entrants 

Current players will be ready to forgo some income if there is a severe threat from new competitors. Mergers
and acquisitions involve substantial investment and scale economies—networks of highly integrated merchants.
Admission is restricted. So the threat from new competitors is lower.

Tractors do not require a high initial investment and do not require access to technology. The main entrance
obstacles are creating items that meet various regional needs, establishing a brand, and establishing a vast rural
distribution network.

Existing participants are ready to give up higher income if there is a considerable threat from new entrants.
Economies of scale and significant investment are required for merger and acquisition—highly integrated dealer
network. Access is restricted. As a result, the threat posed by new rivals is reduced. Tractors don't need a lot of
upfront money, and they don't need technology. The critical entrance obstacles are making items that address
varied regional demands, building a brand, and developing a broad rural distribution network. Because
Mahindra is a well-known brand, there aren't many rivals that can compete with it in Indian marketplaces.

4. Bargaining power of buyers of Tractor Mahindra –

When buyers have significant negotiating power, they frequently seek to lower prices, which reduces Tractor
Mahindra's ability to make long-term profits. Farmers, rental businesses, and construction firms. Tractor
consumers are widely spread out over India. High switching costs for tractors allow companies to make quality
and price concessions—lack of knowledge among farmers on price, products, etc. Since there are only a few
large customers, each is crucial to the business. Buyer power is, therefore, vital.
5. Rivalry among existing players – When intense competition is intense, it becomes difficult for players such as
Tractor Mahindra to earn sustainable profits.

Existing competitors Sonalika, Force, Swaraj, Tafe etc. Unconcentrated and rival is more—competition on
expense and quality. The economy of scale and endless technological innovation make entry barriers.

Due to several takeovers and acquisitions in India's tractor business, player competition is less intense. The
players' respective product portfolios and distribution reach are the primary differentiators. The price freedom
enjoyed by tractor manufacturers demonstrates the mild level of competition.