Five Competitive Forces: Porter's Model

Five Competitive Forces (Porter’s Model)
Intensity of rivalry among existing firms In the Economic Analysis as part of the SPEET Analysis, the top five feed millers in the feed milling industry of the country with seven feed brands. But there are ten companies that are consistently competing with each other and are able to go head-to-head with no prominent market leader. The capacity of these ten feed companies aggregates to 12,836 MT per 8-hour operation accounting to 56% of the registered total capacity for commercial and integrated feed millers. There are 389 feed millers in the country (including the top ten) with 400 different brands of feeds and about 590 home mixers (home based feed millers) with a combined production output of 5.21

First, yellow corn is a very important raw material input to feed millers accounting for about 50 to 70% of their total requirements, depending on the density of operation. Second, small producers and commercial growers are now starting to solidify their stand as far as the industry is concerned. Majority of corn growers are now members of the Philippine Maize Federation, Inc. which is an alliance of corn producers with the primary objective of ensuring the development of the industry and protection of corn farmers. It has become a strong lobby group advocating for the promotion of safety nets for the industry in line with the liberalization of trade and other concerns. Third, corn is a major political crop and the government, despite existing laws regulating and protecting the industry, particularly in terms of trade and production, is still and often times intervening for their cause. This strong bargaining power, however is balanced by some other factors which tend to negate the above-mentioned strengths. First, feedmillers as backward integrators of the livestock and poultry industry are further backward integrating as corn producers themselves. This is usually done through contract growing to ensure that their supply of corn is always and readily available. Second, the constant search for corn substitutes has always been a major research and development strategy of the feedmilling industry. Aside from wheat, cassava and other root crops, e.g. sweet potato, have been considered and tested for viability as corn substitutes. Third, although corn is a major political crop which commands strong government regulation to protect corn producers, feedmillers especially the integrated livestock and poultry raisers are equally becoming powerful in lobbying for their cause. Their stand is basically anchored by the fact that meat in its various forms is also a basic commodity and