Porters Five Force Model

Porters 5 forces model is a standard analysis process to identify external environment of a company. For
SQUARE PHARMACEUTICALS LTD.(Crop Care Division) industry of Bangladesh. And the analysis revealed
following result:

Bargain Power of Customer: Low

 Consumer has no choice but to buy what agriculture officer says. So consumers are left
with zero option for bargain.
 Retail buyers of pesticide are scattered not united as it is not a commodity or regular
product.
 BCPA(Bangladesh Crop Protection Association) tries to control the price but not much
effective due to the political and legal situation of Bangladesh.

So, this observation clearly indicates that the Bargaining Power of Customer is low.

Bargain Power of Supplier: Low

 Pesticide industry depends upon organic chemicals which are easy to produce and
comparatively cheaper in our country. So the producers of these chemicals have almost
zero or little bargaining power.
 Chemical industry is very competitive and fragmented. So switching cost for the bigger
pesticide industries like SQUARE PHARMACEUTICALS LTD. Is less costly and easier. So the
supplier can not bargain much.
 Only a few items of pesticide industry has their own supplier of these import goods.

From, the analysis we can conclude that Bargaining Power Supplier is also low.

Rivalry Among Existing Firm : High

 The number of firm in the industry is very high. So does the competition.
 There are lots of similar sized firm in the industry. Only the market leader SQUARE
PHARMACEUTICALS LTD.(Crop Care Division) is too large than the other companies and
other companies are almost similar in size regarding revenue, market share and
distribution.
  Product differentiation is very ranging to sophisticated pesticide stuffs.
 Cost competitiveness is very in the pesticide industry.

As a result, the rivalry among existing firm is quite high.

Threat of Substitute Products: Very low

 There are little or almost zero substitute for pesticide stuffs. So it can be said there almost
zero possibility of substitution pesticide.
 Biotechnology is a threat for pesticide industry but for Bangladesh this threat will be quite
mild for several decades as the development of that sector is quite mild in our country.

So the threat of substitute product is very low in developing countries like Bangladesh.

Threat of New Entrants: Very High

 Capital requirement for introducing a pesticide company is low for local firm or root level.
So anyone with minimum idea of the industry can easily enter the pesticide industry.
 Creating a regional distribution network is easy as the communication channel became so
developed in the past decades. So any small local firm can easily grab their fair share from
the pesticide industry.

From, the analysis we came to the conclusion that threat of new entrants in the pesticide industry is
very high.

SWOT analysis of SQUARE PHARMACEUTICALS LTD.(Crop Care Division)

Strength

Good will, SQUARE PHARMACEUTICALS LTD.(Crop Care Division) has a very strong base in the locality
and is gaining much appreciated approval overseas. This will give them an upper hand while competing
both domestically and nationally.

Cross subsidization, SQUARE PHARMACEUTICALS LTD. As a whole is a diverse organization that operates
over a wide range of strategic business units that cover pesticide, agrovet goods. Profit retained from
these can be used to found losing concern project or production line, if the managers seem it to be
feasible in the long run.
Weakness

Diversification; although diversification is commonly found on the advantageous perspective, it can be

harmful for a single strategic business unit like, SQUARE PHARMACEUTICALS LTD.

Allocation of resources such as human resources, financial resources, technical resources, physical
resources and information resources can be distributed without rational and efficient decision making
resources from R&D for SQUARE PHARMACEUTICALS LTD. Can be reduced to finance, another strategic
business unit.

Opportunities

Emerging markets, Philip Kotler once mentioned that all star labeled SBUs eventually turn into Cash Cow
SBUs however, with advancement in global economy, a wider market is available to be served to and
increase turnover patent, pesticide firms often are granted patents and even receive loyalties for
development of new drug or pesticide for a certain period of time; this gives these organization a
temporary monopoly state which can be beneficial if product development is efficient.

Threats

Competition, in any market structure, that attain a certain amount of profit, starts to attract new firms
to operate with similar or same product, this cause a decline in market share of existing firm.

Moreover, Competition is one of the biggest threats due to two factors, one of them being domestic
firm, and the other being foreign firms who at times have higher capital to invest and better technology
to implement.