Porters 5 Force Model:

Porter’s Five force model is a method of analyzing the operating

environment and competition of a business. It draws from industrial organizations economics to
derive five forces that determine the competitive intensity and attractiveness of an industry in
terms of its profitability.

Industry Analysis based upon current situations stated by

Wholesalers and Retailers. These Results are solely based upon the response provided by the
industries major components through a questionnaire.

Factors:
1. Bargaining Power of Suppliers:
2. Bargaining Power of Buyers:
3. Threat of New Entrants:
4. Threat of Substitute:
5. Industry Rivalry:

Key= 1= Minimum

5= Maximum

1. Bargaining Power of Supplier:

Factors 1 2 3 4 5 Score
Number &
Size of
X 4
Suppliers
Uniqueness
of each
X 3
Suppliers
product
Focal
Companies
X 4
ability to
Substitute
Experienced
Suppliers
X 3
Flexibility
of Each
X 2
Supplier
Average 16/5= 3.2
Bargaining Power of Supplier:
1. Number and Size of suppliers:
This factor affects an industry in a way that if the suppliers
and the size of supplier is more then it will have less bargaining power, therefore, Upon
our analysis. Home appliance Industry has high number of suppliers and size in
accordance with the variation in their product line as well as orders.
2. Uniqueness of Each Suppliers Product:
In home appliance industry innovation is a
complicated subject as the only unique attribute in the market currently is energy saving
units, colour scheme and touch screen, and almost all manufacturers have that innovation
at a certain price range. Hence less unique products mean bargaining power of the
supplier will be low.
3. Focal Companies ability to Substitute:
Focal companies have a higher bargaining power as
there are more suppliers in the industry, and bargaining power of supplier is less
4. Experienced Suppliers:
In home appliance industry there are many experienced suppliers
who have created a brand name for themselves causing a major customer loyalty purely
based on service provision and experience, but still the number of entities present in the
industry cannot cope up with the prices due to which bargaining power of supplier is
stable with regards to the number of experienced suppliers.
5. Flexibility of Each Supplier:
Companies in Home appliances are quiet stiff in Pakistan as
most of the components are usually imported, due to covid that process was hindered to a
point where a lot of retailers and wholesalers had to close their businesses, hence less
flexibility of each supplier means more bargaining power of supplier.
 2. Bargaining Power of Buyer:

Factors 1 2 3 4 5 Score
Number of
Customers
X 3
Size of
Customers
X 2
order
Difference
Between
X 2
Competitor
Price
Sensitivity
X 4
Buyers
Ability to
X 2
substitute
Average 13/5= 2.6

Bargaining Power of Buyer:

1. Number of Customers:
Due to Pakistan’s current economic situation. The purchasing
power of consumers has decreased by a lot. Which means that there are less consumers
and customers in the industry. Showing an increase in the bargaining power of buyer
from 2 to 3. As there are more suppliers in the market and less consumers, due to which
small retailers have also started to sell products on installments.
2. Size of Customers Order:
Size of customers order have decreased as the purchasing power
of the people is decreasing.
3. Difference Between Competitors:
In home appliance industry there is not a lot variation
available to the customers. Only basic services with different colour scheme and a brand
name. Due to which the bargaining power of buyer is low relating to the difference in
competitors.
4. Price Sensitivity:
Price sensitivity has shown an increase in recent years as consumers are
gathering information regarding the products online beforehand. Which lowers down the
bargaining power of supplier and increases the bargaining power of supplier. This sudden
increase in price sensitivity is also contributed by Purchasing power of the
consumers/customers.
5. Buyers Ability to Substitute:
 Home Appliances do not have product/service substitution
other than conventional methods. The only available substitutes are gas to electricity and
vice versa. Therefore, lack of substitution is directly related to lack of innovation and this
factor contributes to the low bargaining power of buyer as there are no substitutes.