Plastic Industry Case Study

The level of competition among companies in the plastics industry is considered at a high level. For the reason that:
 Currently, in Vietnam there are about 2,000 companies in the country engage in plastic trading, mainly small and medium ones. The large number of companies and the dispersions have increased the competitive pressures in the industry. Plastic industry is a scattering sector so no company can dominate the rest.
 Raw meterial prices are highly dependent on world price fluctuations and account for 80% of the cost of goods sold. Thus, lead profit margins more vulnerable to change in inputs. To ensure profitability, the task set up for plastics companies is maintain and increase their market.
 The level of differentiation among

Therefore, companies in the south will face more competition than those in the northern and central regions.
Threat of new entrant
The risk from competitors entering the plastic industry is considered on average. For the reason that:
 Barriers to entry into the industry is not major: the establishment and development of a plastic company requires not much capital, technological production lines are not too complicated.
 Enthusiasm of the industry is right: Despite the demand for raw materials and the development of a large economy, profit margins are limited to reduce the degree of entry into the industry of new companies.
 The number of brand brand companies accounted for large proportion will be a big obstacle for companies wishing to enter the plastics market. In addition, that companies (eg BMP, NTP ...) have built up a comprehensive distribution system and discounted for sales agents. This will be a major obstacle for new entrants to enter the distribution

That lead to the position of domestic suppliers are lower than foreign suppliers. Petrochemical industry in Vietnam is still young, products of this industry have not met the category as well as output. Thus, the ability to self-source material of the plastics industry in nation will not be able to improve in the near future.
 The number of domestic plastic companies is relatively large, while the supply of raw materials is limited.
Bargaining power of suppliers
The buyer's bid power at a high level. Because:
 The plastic products are rampant and reasonable price plus these products are of high quality. That reason lead to the decision to change the habit of using plastic products of customers . this is a big pressure for the domestic plastic companies.
 Customers of plastic construction materials in construction, industry, post and telecommunication, transportation, while plastic packaging mainly from the retail market, concentration level The number of customer is not high.
 Competition in the industry, plastics companies, especially construction plastics often have to maintain high discount rates for customers to maintain market