Porter's 5 Forces

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The Indonesian Mattress and bedding industry will be analyzed using the Porter’s 5 forces model: Porter five forces that determines an industry’s competitiveness (Porter, 1979), which will give an indication of how the industry affects DAP. The five forces are the “Bargaining Power of Suppliers, threat of new entrants, threat of substitute, bargaining power of buyers, and the industry’s rivalry. Threat of Substitute products or services: Low As a mattress manufacturer, DAP supplies Spring Bed Mattresses, Box Spring Mattresses, Memory Foam Mattresses (Tempur-Pedic) and Latex Mattresses. Today, there are three alternative products used for sleeping in the Indonesian market. (Whats the Best bed, 2015) The first one is the Air Mattress. These mattresses…show more content…
These suppliers are concentrated in Jakarta and can be purchased from for just-in-time procurement. The number of suppliers of this input is high as these materials can be procured from foreign suppliers as well. The cost of switching to another supplier is low and therefore, suppliers of this degree have little bargaining power. However, businesses in the mattress industry compete on technological superiority. Once an organization does not have the technical capability to serve the market of a certain technology, then this production process needs to be outsourced. AGRO International GmbH & co. KG - German producer of innerspring systems - supplies LFK, Bonnel and Pocket springs to mattress manufacturers such as SpringAir Indonesia. The uniqueness of the spring systems gives a supplier such AGRO the power to bargain. Therefore, the bargaining power of suppliers in the mattress industry depends on the business model. If the organization has the technical capability to manufacture the mattress themselves, then the supplier power is low. Once a specific technical part needs to be outsourced to a supplier, then the supplier power is high. DAP has the technical capability, and therefore a competitive advantage over the other mattress manufacturers in…show more content…
These young professionals are planning to create a family and in order to target this segment, SpringAir keeps building its image as a family based brand. Also, SpringAir makes intensive use of online marketing platforms such as Facebook and Twitter to appeal to the young target group. Over the years, competitors have differentiated its product line by offering varied product lines. This especially accounts for the bedding accessories. Threat of New Entrants: Low New mattress brands are required to use aggressive marketing campaigns to gain market share in the mattress industry. The competitive landscape of the mattress industry makes it difficult for new business to engage in this industry. Firstly, setting up a new mattress brand is very costly in today’s competitive market. The first problem a new entrant will run into is the need for the required technicality and assets. The capital requirements are very high to get economies of scale. Current businesses have the cost advantage of having local manufacturing
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