Porter's 5 force model

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Slide 1:

PORTER’S FIVE FORCE MODEL Presented by - Sandip Saha

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D.O.B Education Achievements Michael Porter

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The purpose of Five-Forces Analysis To know about different forces that impact on a company’s ability to compete Diagnose the principal competitive pressures in a market Assess how strong and important each Force is

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PORTER’S FIVE FORCE MODEL

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Barriers to Entry Product Differentiation Access to Distribution Channels Government Policy Capital Requirements Technology

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Number of Suppliers Switching Cost Unique Service / Product Cost related to purchase Suppliers Concentration Bargaining Power of Suppliers

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Bargaining Power of Buyers Number of customers Buying Volume Buyer’s Information Buyer’s Profit Differentiation

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Substitute Performance Switching Cost Buyer’s Willingness

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Competitive Rivalry Number of Competitors Market Share Brand Identity Switching Cost Exit Barriers

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Competitive Analysis of TATA Nano using Porter Five forces

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Threat of new entrants is influenced by - Factors Tata NANO Advantages Threat of new entrants Entry Deterring Price Yes, The Price is Rs 130,000. Low Retaliation by TATA in case of competition Yes, because of large resources. Low High Entry Costs Yes , TATA spent Rs 17oo* crore as initial investment + 4 years on research Medium because of reverse engineering process and availability of resources. Experience HIGH because of its parent experience(TATA Motor) Low Other Cost advantages Yes** Low Overall Rating : LOW

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Bargaining Power of Buyers is influenced by - Factors Tata NANO Advantages Buyer Power Differentiation Price , Durability , Brand equity Low Concentration Large number of consumers Low Profitability Easy Availability of loans Low Quality Car has passed the full frontal crash and side impact crash Passed Govt. Test of emission,noise and vibration Low Overall Rating : LOW

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Bargaining Power of Suppliers is influenced by - Factors Supplier Power Concentration High Low Switching Costs Low Low Organization/cartel No Low Diversification of supplier products No Low Overall Rating : LOW

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Threat of Substitute product is influenced by - Factors Threat of substitute Availability Same category -NO low Other Category substitutes Yes, but, minimal extent e,g . High end bikes and other car models like Reva,Alto Medium Time Lag in availability of same category product High Low Quality of substitute Quality influences the customer. Low in short term Overall Rating : LOW

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Rivalry among Existing competitors is influenced by - Factors Rivalry among existing competitors Brand Image Brand equity influences the customer Low among same category No.of Competitos Negligible in short term low Size of payoff Depends on Volume Low Switching costs Medium as customers can switch to other products Medium Origin of competitors Diverse High Overall Rating : Medium

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