Main Aspects of Porter's Five Forces Analysis

Main Aspects of Porter's Five Forces Analysis

The original competitive forces model, as proposed by Porter, identified five forces which would impact on an organization's behavior in a competitive market. Understanding the nature of each of these forces gives organizations the necessary insights to enable them to formulate the appropriate strategies to be successful in their market. These include the following:

Threat of New Entrants:

The Digital camera is primary dominated by few competitors found in Japan including Olympus, Panasonic, Pentax, Nikon, Canon, Sony. It possesses a strong barrier for new companies who desire to enter into the market. For instance, it becomes rather difficult for new entrants to raise sufficient capital and R&D knowledge to invest and develop the new digital camera.

Bargaining Power of Suppliers:

Olympus has production plants in Japan, China, Vietnam and Malaysia. Since the cost of factory product in China increment dramatically of the high labour cost and raw material cost. Olympus set up the plants in Vietnam and Malaysia sourcing for lower the production cost.

Threat of Substitutes:

General substitution is able to reduce demand for a particular product, as there is a threat of consumers switching to the alternatives. Mobile phone with camera function will be the substitutes. People prefer the all in one machine, like iphone as the mobile, camera, and little computer can connect to the internet, mp3 player, instead of carry mobile, camera, mp3 player and notebook / tablet.

Bargaining Power of Competitors:

Buyers seek to pay the lowest possible price in the similar quality product. Compare to direct competitors, Olympus always sets the similar price of the direct competitor in same model range,