PORTER’S FIVE FORCES MODEL

OF COMPETITION
SUBMITTED TO:
Dr. ABHINAV P. TRIPATHI

SUBMITTED BY:
KANIKA RUSTAGI (BM-020044)
MANORANJAN SINGH (BM-020048)
MANSI GUPTA (BM-020050)
MEGHA KUMARI (BM-020052)
NIHARIKA HANGLOO (BM-020059)
PRIYA (BM-020065)
What is Strategic Management and its significance?

“Business Strategy is the Battleplan for better future”

~Patrick Dixon

 An essential component, refers to the formulation and implementation of the objectives and initiatives.
In simpler words, to ensure wise decision-making processes, it is important that strategies are in place
to support the business functions and operations.

 The main importance of strategic business management is to assist the business’ profit and decision
making, yet its functions can also be broken down. Here are some reasons why strategic management is
a crucial business practice:

 Planning
 Forward thinking
 Resource allocation
 Strengths and weaknesses
 Environmental impact
 PORTER’S Five Forces Model
 It is a framework that attempts to analyse the level of competition
within an industry and business strategy development.
 It draws upon industrial organisation (IO) economics to derive five
forces that determine the competitive intensity and therefore
attractiveness of an industry.
Attractiveness in this context refers to the overall industry profitability. An
unattractive industry is which the combination of these five forces acts to
drive down the overall profitability.
 It animates the positioning of company in industry, identify the level
of improvements in strategies, which in result may highly pay-off. In
addition to this, it also helps the company to identify the opportunity.
Five Forces Analysis
 Threat of New Entrants:
 A company's power is also affected by the force of new entrants into its market.
 The less time and money it costs for a competitor to enter a company's market and be an
effective competitor, the more an established company's position could be significantly
weakened.
 An industry with strong barriers to entry is ideal for existing companies within that industry
since the company would be able to charge higher prices and negotiate better terms.
Strategic Plan?

 Threat of Substitutes:
 The one out of five forces focuses on substitutes. Substitute goods or services that can be
used in place of a company's products or services pose a threat.
 Companies that produce goods or services for which there are no close substitutes will have
more power to increase prices and lock in favorable terms.
 When close substitutes are available, customers will have the option to forgo buying a
company's product, and a company's power can be weakened.
Strategic Action?
 Power of Suppliers:
 The next factor in the five forces model addresses how easily suppliers can drive up the cost of
inputs.
 It is affected by the number of suppliers of key inputs of a good or service, how unique these
inputs are, and how much it would cost a company to switch to another supplier. The fewer
suppliers to an industry, the more a company would depend on a supplier.
 As a result, the supplier has more power and can drive up input costs and push for other
advantages in trade. On the other hand, when there are many suppliers or low switching costs
between rival suppliers, a company can keep its input costs lower and enhance its profits.
 Power of Customers:
 The ability that customers have to drive prices lower or their level of power is one of the five
forces.
 It is affected by how many buyers or customers a company has, how significant each customer
is, and how much it would cost a company to find new customers or markets for its output.
 A smaller and more powerful client base means that each customer has more power to
negotiate for lower prices and better deals. A company that has many, smaller, independent
customers will have an easier time charging higher prices to increase profitability.

Strategic Action?
 Rivalry inside the Industry:
 The first of the five forces refers to the number of competitors and their ability to undercut a
company. The larger the number of competitors, along with the number of equivalent products
and services they offer, the lesser the power of a company.
 Suppliers and buyers seek out a company's competition if they are able to offer a better deal or
lower prices. Conversely, when competitive rivalry is low, a company has greater power to
charge higher prices and set the terms of deals to achieve higher sales and profits.
EXAMPLE OF DTH
Potential of New Entrants Into an Industry:

The possibility of new entries in the DTH space is low since there are already players in
the markets.

Potential of Substitutes:
Terrestrial, cable, and IPTV both face tough competition from DTH. According to industry
figures, there are 130 million TV households  with 71 million operated by cable, 6 million
by DTH, and the rest by terrestrial broadcasting. 
Bargaining power of suppliers

There are three main manufacturers in the DTH sector. The Ku band transponders are receiving
satellites and content by comparing the satellite dish, Set Top Box with the necessary Access Card,
and the customer premise equipment (CPE). With India on track to surpass Japan as Asia's largest
DTH market next year, India's DTH operators' negotiating power with CPE suppliers has been
slowly rising.

Bargaining power of buyers

With too many options to choose from, both in terms of alternative mediums such as cable, IPTV,
and terrestrial broadcast, as well as the growing number of DTH operators, the user will make his
own decisions. Customers will continue to have a strong negotiating position before DTH
platforms begin to distinguish themselves as superior competitors by providing quality content
and transparency.
Rivalry among existing firms

With 3 operational players and 4 players in the queue, inter firm rivalry is quite high.
The competition from state owned DD-Direct to private players in negligible from the content
point of view as the number of channels offered by DD-Direct is very limited. However, DD-Direct
does not change any monthly subscription charges.  Between Dish TV is Tata Sky there is an
intense rivalry exhibited by price war and discount schemes offered to new connections. Being
the first mover, dish TV had price advantage in both the STB offers superiors DVD quality Video to
its advanced STB.
Analysis of the Industry using Porter’s five forces model

Porter’s value chain analysis is considered with the value analysis of the several functions of
the DTH industry, it makes to understand the importance of this model to develop and add
on value to the present features of the industry and it’s functioning.
Value analysis says that an effective logistics should be undertaken to commencement of the
business in cost effective way. The most the cost effective, the more value is added to the
process.  It is noting but proper or optimal use of the resources present and using the
technology.  This value addition is not only in the logistics, it should be carried in all areas of
the management, production, distribution and etc.  Thus DTH industry can increase its value
addition to the customers and the features and of industry.