Company Competivenes: 5 Forces Analisys

4.- Company Competivenes: 5 forces analisys

Potential entrants

A firm should invest huge financial resources in order to enter the industry. It has to make great initial investment in research and development, also in localization and distribution reach. High technological expertise is extremely important for this kind of industry and it will be hard for all the new entrants to achieve it. Big companies have already established themselves in terms of brand recognition, brand loyalty and distribution channels. All of them experience difficult times and make little profit or no profit at all. We consider that for the international companies like Haier, Electrolux, Whirlpool the threat of new entrants is low.

Power of buyers

If we take into cosideration both- large distribution chain and consumers we can say that they are with high price sensitivity with high relative bargaining power. Customers are offered a great diversity of products at different prices. The consumers can compare these products or service price and quality which inevitably increase the pressure to manufacturers. Products offered in this industry have long useful lives which mean that buyers would shop around in order to find what suits them best. On the other hand buyers’ information (more information, more bargaining power) and switching costs are low. All of the companies in this industry use different strategies to reduce the buyer power- quality strategy, supply-chain management, customer relationship management,etc.

For example Haier’s supreme quality has been validated by many international standards, such as ISO9001, ISO14001, UL, CSA, SAA, CE, etc. The supply-chain management of the company includes framework construction, function integration, internal supply chain integration, external supply chain integration and dynamic alliance of integrated supply chain. Customer’s information by computer systems, providing helpful service information to customers and e-Business as a method of effective utilization of information technology are customer relationship managements.

Supplier power

Generally manufacturers are dependent on materials’ prices and availability. However, there are numerous suppliers worldwide. If we take into consideration just home appliances segment we can say that it is sensitive to material and logistics costs. Some companies observed financial losses as a result of the dramatic increase in materials prices. Moreover many international suppliers have comparatively higher technology and design capabilities, and thus have greater bargaining powers.

In order to reduce the supplier power all big companies use differnt methods. Haier uses overall Every Control and Clear (OEC), 3Rs and 3Ts support.

Threat of