Porter’s Five Forces, the best framwork to take your business to new heights of success

Porter’s Five Forces.

Success comes gradually and for businesses and companies, it is very important to maintain their pace to become successful. One major problem that most of the companies’ face is that there are competitors in the market that impose a great danger to their progress. This is why some companies keep check on the things that can be a danger for their progress in the market. Using Porter’s Five Forces may be useful in such a situation.

Porter’s Five Forces is a process that involves considering 5 of the major concerns about the progress of your company. There can be a lot of things that someone tries to compare and most of them could be potentially useless. This is why when Porter recognized the problem, he introduced the 5 main things to check and these were named as Porter’s Five Forces.

Here we will discuss each of them and how you can implement them for your business or company’s progress. Here are the details about each of Porter’s Five Forces and how they can affect your business position in the market.

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Let's take a look at the five forces, so you can use this framework for you and your strategy:

1. The threats of a new entry in the market.

While you stand among the only or one of the best companies in the market, there can be a situation where someone comes into your field of business. This is known as the threat of a new entry in the market. That new entry can be more financially stable as compared to you and that can cause serious problems related to your progress.

This is because that new entry can not only get in your position, they can create a serious competition in the market and for some types of businesses, it is possible that the new entry employees all of the good quality employees and services. This will be devastating for your business.

How can you stay safe from this?

As anyone can make an entry in the market but if you stay on the safe side, you can protect your business and its position in the market. Here are some ways to stay on the safe side.

• Know about what it takes to make a new entry in your field. This will help you with the following things.
• You can keep the backup of money.
• You can maintain the security of your technology and employees.
• You can plan or make your business scalable.

Knowing about the barriers and the strict regulations to make a new entry will make you aware of the time stamp in which you can make a new move whenever your position is being challenged by a new entry. With this, you will have enough time to introduce something better in the market that will be the savior of your position in the market.

2. The threat of substitution:

This is another major threat to the position of a company or a business in the market. This threat is all about someone getting the services or products that you used to provide. The reasons why some businesses might have to face it are listed below.

• The substitute provides the solution in less time.
• The substitute provides the solution in better quality.
• The substitute provides the solution at a lower price.
• The substitute provides more reliable solutions.

There can be any of these reasons or all of them can be combined in the worst-case why a business loses its customers. If we take an example, we will be able to see that the technology of MP# players replaced the cassette and CD players drastically in the market. This is because of their convenience and other better features.

How can you deal with this threat?

If you want to maintain your position in the market, you will have to deal with all the problems that your substitutes can impose. Here are some of them and their solutions.

• You must know how many substitutes are available in the market and how they are working in your field.
• As a business, you must keep track of the cost that is competing against your products in the market.
• Your business must have a proper plan to switch to the newer products or services in case someone else introduces them in the market.
• Your business must plan to act as a substitute in the market for another business that is better in the market. For this, you will have to get some new or good products and services.
  

3. Bargaining power of suppliers:

The profit of any business depends on the difference it puts between the cost price of its products and the sale price of its products. For this, different businesses use different suppliers for a specific product. The bargaining power of the supplier can have major effects on the profit that your company makes from a specific product.

How to tackle this problem?

Here are some ways in which you can tackle this problem.

The reason why most suppliers increase the price for a specific product is because their product is either unique or it is not readily available. In this case, you can contact more suppliers for the same product. As you will have more suppliers in contact, you can easily get the best price.

It is a good practice to have a lot of suppliers for a single product. This is because whenever you have to face this problem, you can easily switch to a cheaper alternative.

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4. Bargaining power of buyers:

As a manufacturer, the prices that buyers pay for your products ultimately decide the profit that you will make from that product. Here the problem is that sometimes buyers pay lower prices for your products. This is because of the following reasons.

• The competitors in the market are providing better quality.
• The competitors in the market are providing lower prices.
  

How can you deal with this?

When you have an order for any product, the sale prices will decide the profit that you will make. While you are facing the bargaining power of the buyers, you can consider the following things to provide them a better price.

1. How many options do they have in the market for the same product?
2. How the competitors are controlling the prices in the market?
3. How large is the order that you are getting?
4. Is it easy for your customer to switch you for another seller?

After considering these things in-depth, you can decide what price for the product must the buyer get.

5. Competitive rivalries:

Competitors in the market can be a great potential danger to the position that you have in the market. This is because they can provide the same products for lower prices. This can easily make your customers switch between you and your competitors.

Dealing with this problem:

To deal with this problem, here are some things that you must consider.

1. The number and strength of the competitors present in the market.
2. How the competitors control the process in the market.
3. What is the quality that your competitors provide to their customers?
4. What is the main difference between you and your competitors?
5. Is it easy for your customer to switch you for another seller?

When you know the answers to all of these questions according to the conditions of your market, you can easily make intelligent moves in the market to gain and maintain your position.

How can you implement these Porter’s Five Forces for the betterment of your business?

While everyone wants to have a good position in the market, different strategies are used for this. One great way of getting and maintaining the position in the market is that you examine your business according to Porter’s Five Forces as a comparison with the competitors in the market.

After you get answers to all the questions related to Porter’s Five Forces, you will be able to make some intelligent moves to get in a better position in the market. Here are some of the recommended moves to make to have a better position in the market.

Make your product unique in the market:

The way of marketing a product affects the sales of your products in a great way. You must introduce your product as a unique item in the market in terms of its price, quality, and features. This efficient way of marketing will provide you with better sales.

Focus more on your buyers:

We play the role of a dominant seller in the market; it is very important that you focus on your customers. For this, you will have to focus on what they need and provide better prices as compared to your competitors in the market. Providing better quality at the best price will get you more customers.

Control the cost of your products in the market:

The last thing to focus on is the price. While you try to provide the best price in the market, you must never try to compromise on the quality. Doing this will make you lose your customers.

Conclusion:

Every company and business want to be at the top of the market. To do this you not only have to focus on yourself, but you also have to take a look at your competitors and the trends of the market. With the help of Porter’s Five Forces, you can examine your business for different factors and make intelligent and efficient moves to get in the best position.