Industry analysis using porter five forces which is analyzing the external envir
ID: 433521 • Letter: I
Question
Industry analysis using porter five forces which is analyzing the external environment using the five forces which are: Rivalry Buyers’ bargaining power The threat of new entrants Substitution threat Suppliers’ bargaining powerFor ericsson telecommunications and this is their website https://www.ericsson.com/en
Industry analysis using porter five forces which is analyzing the external environment using the five forces which are: Rivalry Buyers’ bargaining power The threat of new entrants Substitution threat Suppliers’ bargaining power
For ericsson telecommunications and this is their website https://www.ericsson.com/en
Industry analysis using porter five forces which is analyzing the external environment using the five forces which are: Rivalry Buyers’ bargaining power The threat of new entrants Substitution threat Suppliers’ bargaining power
For ericsson telecommunications and this is their website https://www.ericsson.com/en
Explanation / Answer
Porter’s five forces comprises of external environment analysis in order to determine the level of competition and attractiveness in the Industry. Porter has identified these five factors as micro environment factors with the sense that these forces effect the business more quickly than macro environment factors. For Ericson Telecommunications, Porter’s 5 five forces analysis are as follows-
1. Threats of New Entrants
It is the most important factor in Telecommunications Industry to be consider. Managers are continuously in pressure from new innovations, new businesses technologies with lower price/cost as well as more value propositions for the customers. Therefore, to address this problem Ericson has full dedicated research team as well as innovation mangers looking and analysing the competition from new players enter into the market. The proper analysis is being done to safeguard the company from challenges and external barriers. It is done through new products innovations, building economies to scale through extensive production to fixed low cost to the product, keeping the standards high from the competitors.
2. Bargaining Power of Suppliers
All material is obtained from some suppliers and to maintain good margin with them is the challenging role of negotiation for managers. Ericson keep check that suppliers if became dominant can reduce their margins in the market and therefore firms use high negotiation power r to extract higher prices of telecom equipment’s. Ericson do this through building effective supply chain with suppliers, experimenting the product design with different material obtained from different suppliers, etc.
3. Bargaining Power of Buyers
Today, Buyer is the king. To tackle the bargaining problem of buyers, Ericson believe in building large customer base so that company will not be affected with few buyers high bargaining problem. Company work on innovation and reducing the defection rate to gain strong position in the market.
4. Threats of Substitute Products or Services
When products meet similar products, it decreases their efficiency in the market. To deal with substitute’s products, Ericson focuses on being service oriented rather than only product oriented. Ericson analysis the core needs of the customers.
5. Rivalry among the Existing Competitors
To avoid rivalry among existing firms in competition, Ericson is working on building sustainable differentiation. Ericson also believes in collaborating with competitors to increase the market share rather than just competing in a small market with few customers.