The five-force study

The five-force study

1. Industry analysis

• Five-force analysis

The five-force is an organizational competition tool that helps an organization to know its position in the participating industry. The five-force study focusses on the 5 area which includes;

• Competitive rivals entail an organization positioning and comparing itself to the existing companies. A company increases competitive advantage by providing quality goods, good pricing models, marketing, and good marketing.
• Threats of new entrants increase competition, and the organizations should ensure that new entrants do not overtake what we already offer. However, it will be worse if the switching cost to competitor products is low.
• Bargaining power of suppliers is critical because they control how an organization sources for products. An organization should ensure there are alternative suppliers and not dependent on one.
• Buyer power in an industry is essential. Too much buyer power means that the buyers can dictate the buying habits and can influence business decisions like pricing.
• The availability of threats determines the profitability of an organization. Too many substitutes mean numerous products are pushing the demand low, and organization should ensure the products they offer are high quality to reduce the possibility of losing consumers to rivals.
• Industry life cycle.

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• The life cycle entrails the business continuation model and has four steps.
• The early development stage occurs after an organization starts operations. It is a stage where profitability is low because the firm is trying to establish itself by getting new clients through marketing.
• In the rapid expansion stage, the business has loyal customers, and distribution and operations are efficient. The company production process is valid, and company profitability increases. There is potential to grow further.
• In the maturity business stage, the business establishes itself in the industry, and its products are accepted in the market. The business growth potential is little. The profitability is high in this stage and can plan on further expansion.
• In the Stabilization or decline stage, the business has no growth potential, and it gets to maximum production capacity. The business profitability is maintained, but in this stage, the risk of decline is high, especially if the industry of operations has many competitors.
• Industry fundamentals
• fundamentals help in determining the structural position of the organization in the broader market on various grounds;
• Significant competitors and market share determine the main rivals in the industry and the market share an organization holds in the area of operations. When an organization dominates the market due to the acceptability of its goods and services, the business has a good market share.
• Market growth and outlook compare an organization’s growth trend compared to the industrial direction. If the company maintains the market speed, the organization can keep up with the industrial needs.
• Industrial profitability and return positions a business performance on the industry where the returns to investors are established. When a company creates formulations and exceeds the industrial competitors, the company operations will be swift, resulting in more profits and high returns.
• Customer bargaining power dictates how organizations offer their goods and services. Customers determine the pricing of products and can switch or stop the consumption goods at will. Companies have to provide goods that are of high quality.
• Economic sensitivity prepares an organization for preparedness during unpredictable economy trends. An organization should make itself for such times by strategically planning.

1. Company analysis

• the analysis is a process carried out in an organization by the organization’s stakeholders to evaluate it attracts invest in it.
• analysis comprises all strategies that position an organization in a better position to be preferred over the competitors which may include;
• goods which are of high quality
• of scale
• expertises
• and distribution efficiencies.
• dominance and market share
• moat is the ability of the business to maintain its competitive ability
• strategies to ensure they dominate the markets by providing there is enough research and development to ensure the goods are of high quality, quality products, and production efficiency.
• Strategies are an organizational plan of action to ensure an organization remains competitive in the process of attaining objectives set. Financing is vital in ensuring that an organization actualizes its plan.