What Is Porter's Five Forces Analysis

1. Introduction

In this paper, we will discuss and make management recommendation based on PESTEL and Porter’s Five Forces analysis. The company we will be looking at will be Pentagon Freight Services, more specifically their Singapore division Pentagon Freight Services (Singapore) Pte Ltd (PFS), Company Registration No. 198101955G. What is Freight Forwarding? It is a business arrangement in which a third-party company arranges storage and shipping of items on behalf of its customers.

2. Pentagon Freight Service (Singapore) – Profile

In 1981, Pentagon Freight Services opened their Singapore office to support its operations ranging from the Indian Sub-Continent, through to the Russian Far East. Their services include forwarding by air

Porter’s Five Forces Analysis

4.1 What is Porter’s Five Forces Analysis
In 1979, a Harvard Business School professor by the name of Michael E. Porter introduces the analysis in which an industry’s attractiveness and profitability can be analysed. This became known as Porter’s Five Forces Analysis, it covers Competitive rivalry, Threat of substitution, Buyer power, Supplier power and Threat of new entry.
4.1.1 Competitive Rivalry
The key aspect of this force is the number of competitors and its ability to threaten the organization. If an organization has too many competitors who offer the same services, than it will have little power as supplier and buyer will go elsewhere.
4.1.2 Threat of Substitution
Substitution is defined as services needed by the consumer but can be found in another market. This is not the same as changing to a different company services but switching the service entirely.

4.1.3 Buyer Power
The buyer has the power to demand lower price with higher quality from producers when their bargaining power is strong. However, lowering of the price will result in lower revenue while higher quality will result in higher

This requires private carriers like Antonov Airlines and Volga-Dnepr Airlines. Having partnership with these private carriers will help to speed up the process of clearance and coordination of moving these equipment.
6. Conclusion
As analyzed from both PESTEL and Porter’s Five Forces, PFS is an organization which is almost immune to the forces from Porter’s Five Forces as its niche market is very specialized with little competitive rivalry, no threat of being substituted in the foreseeable future, limited buyer power and little chance of new entrant to the industry. However, PFS is still vulnerable to their supplier (the carriers), this is due to the fact they (the carriers) will have final say on what could be brought into their vessels.
Although PFS might be slightly immune to Porter’s Five Forces they don’t fare to well under PESTEL. Being a freight forwarders there are plenty of political sanctions and legal requirement that needs to be adhere to as the penalty are stiff. Apart from this, they are also very vulnerable to the economic outlook of the oil and gas industry. When oil and gas companies have little or no projects, than PFS will find themselves with no