Bargaining power of suppliers and buyers
Posted: Sun Dec 22, 2024 10:33 am
We have two final forces before us: suppliers and buyers. I will describe them together, since their analysis proceeds in the same way. First, we must consider the groups and organizations that the company being analyzed pays to supply a product or service. When analyzing the attractiveness of an industry alone, only the largest suppliers will suffice. In the case of laptop manufacturing, these are the parts manufacturers, laboratories, and laptop shipping companies. Next, we need to determine their power indonesia whatsapp mobile number of influence in the company. In other words, to what extent our suppliers "dictate terms" to us. This can be done using a scale of 0 to 5.
In our case, it will usually be from 0 to 2. The same should be done with buyers. Remember, however, that the buyer is not necessarily just "John Doe" who will use our product. Buyers are also distribution channels, i.e. in this case hardware stores, companies, and sometimes state institutions. Here, too, it is necessary to determine the strength of the influence of buyers on the analyzed company. As far as individual customers are concerned, it will be high: the product is ultimately addressed to them. The influence of hardware stores is somewhat lower. As for the other types, they represent a small fraction of the total number of buyers, so their impact strength is low.
Recommendations
Once all the forces have been analysed, a global diagnosis of the attractiveness of the sector can be made. In the case of the mobile computing market, the "diagnosis" will be as follows:
The notebook market is mature and companies operating in it enjoy strong revenues. Notebook manufacturers do not compete with each other particularly fiercely. Competition mainly takes the form of promotion and advertising of their own strengths. The threat of substitutes is low and companies enjoy a high degree of independence from suppliers. However, this positive image is marred by the fact that huge financial outlays are required to enter this market, both for production on a global scale and for marketing activities that would span the entire world.
The analysis carried out in this article offers a good approximation to the use of the concept of Porter's 5 forces.
In practice, Porter's 5 Forces analysis is often augmented by other methods, such as SWOT analysis or PEST analysis . Industry attractiveness scoring can also be used . In order to ensure that the market research is as accurate and detailed as possible, it is advisable to use the services of a professional consultancy. The costs of working with specialists will more than pay for themselves, as the organisation will be able to make more precise decisions to ensure success and growth, based on proven facts and data.
In our case, it will usually be from 0 to 2. The same should be done with buyers. Remember, however, that the buyer is not necessarily just "John Doe" who will use our product. Buyers are also distribution channels, i.e. in this case hardware stores, companies, and sometimes state institutions. Here, too, it is necessary to determine the strength of the influence of buyers on the analyzed company. As far as individual customers are concerned, it will be high: the product is ultimately addressed to them. The influence of hardware stores is somewhat lower. As for the other types, they represent a small fraction of the total number of buyers, so their impact strength is low.
Recommendations
Once all the forces have been analysed, a global diagnosis of the attractiveness of the sector can be made. In the case of the mobile computing market, the "diagnosis" will be as follows:
The notebook market is mature and companies operating in it enjoy strong revenues. Notebook manufacturers do not compete with each other particularly fiercely. Competition mainly takes the form of promotion and advertising of their own strengths. The threat of substitutes is low and companies enjoy a high degree of independence from suppliers. However, this positive image is marred by the fact that huge financial outlays are required to enter this market, both for production on a global scale and for marketing activities that would span the entire world.
The analysis carried out in this article offers a good approximation to the use of the concept of Porter's 5 forces.
In practice, Porter's 5 Forces analysis is often augmented by other methods, such as SWOT analysis or PEST analysis . Industry attractiveness scoring can also be used . In order to ensure that the market research is as accurate and detailed as possible, it is advisable to use the services of a professional consultancy. The costs of working with specialists will more than pay for themselves, as the organisation will be able to make more precise decisions to ensure success and growth, based on proven facts and data.