Essay On Porter's Five Forces Model

Good Essays
PORTERS FIVE FORCE MODEL Porter’s 5 forces model is used for strategic industry analysis which is an essential tool for understanding the power lies in a business situation. The model is frequently used to identify industry's situation in order to determine the corporate strategy by evaluating the profitability and attractiveness of the industry. In this model, the attractiveness and profitability is determined by five forces identified in 1979 by Michael E. Porter for determining the nature of competition within the industry. The significant strength of each force in the model affects the marketing strategies of the company such as pricing. The five forces Michael E. Porter identified are (Arline, 2015)  Threat of new entrants  Bargaining…show more content…
Firstly, there are many furniture outlets (competitors) who have at least 10 to 15 years of experience in the market. Damas Company has around 30 to 36 years of experience in the market which existed in the year 1978 while Sun front has 25 to 30 years of experience. Meanwhile, Allora has 14 years of experience in the furniture market. In addition, these furniture outlets are selling furniture to different strategic groups such as low income earners and high income earners at different qualities and price ranges. Furthermore, there is high barrier to exit in the market for existing furniture outlet as it is not easy to sell all the furniture within a small time frame for an acceptable price by the company. This impact is high for those companied who sell high quality furniture at a higher price ranges. It is because, the price reduction for clearance sale might not be low enough to compete with the furniture outlets which sells furniture at an affordable prices. Besides, customers are not loyal to any given furniture outlet, but they find best product from the market after considering factors like affordability, quality and free delivery and
Get Access