Michael Porter Competitive Strategy TECHNIQUES FOR ANALYZING INDUSTRIES AND COMPETITORS The Porter Model • The Model Bargaining Power of Suppliers Potential Entrants Industry Competitor Threat of Substitute Bargaining Power of Buyers Industry Competitor • Competition Drives Down the Rate of Return • Consolidated Industries, Little Room for Mistake Among Rivals • Lack of Differentiation or Less Switching Cost • Merger and Acquisition Increases Competition • High Strategic Stake in Achieving Success for Each Company • Economies of Scale is Crucial • Strategic Alliances and More Threat of Entry • Economies of Scale by Businesses • Product Proliferation • High Capital Requirement for Investment • High Switching Cost for Customers • Cost Advantage by the Established Businesses/ Price as a Barrier • Access to Viable Distribution Channels • Government Regulations Threat of Substitute • Lack of Differentiation Among Various Existing Products • Low Switching Cost for Customers • Innovation in the Industry and less Innovated Products • Brand Names and Quality of Products • Weak Distribution and Customer Service • Fragmented Industries More Prone to Differentiated Products Bargaining Power of Buyers • Price a Fraction of Buyers Cost, Buyers less Price Sensitive • The Switching Cost is Low. Availability of Similar Products in the Market • Forward and Backward Integration Lessens the Bargaining Power of Buyer. Self Manufacturing and Self Distribution by Car Industry • The Information of Buyer on the Market, Demand, Competition and Market • Wholesalers as Buyers can Impose Bargaining Power Over Suppliers • When Customers decision on Buying can be influenced by Retailers Bargaining Power of Suppliers • When the Industry is Dominated by a Few Suppliers • When the Supplier Competes with Alternative Supply and Suppliers • When the Supplier Sells not to one Industry but More • The Supplier's Product is Crucial to Producer's Product • The Suppliers Product is Well Differentiated • The Supplier Threat of Forward Integration Exists • Government Influence in the Industry for Substitute Product Strategic Group Within an Industry • Strategic Groups are Leading Companies in an Industry. They Have Reached Economies of Scale and Occasionally Scope • Entry Barriers are Imposed mostly by Strategic Group in an Industry • Mobility Barriers Are determined by Skills, Resources, Strategies and Cost • Strategic Groups Have Different Amount of Power vis-à-vis Buyers and Suppliers • Strategic Groups are Exposed to Substitute Products for Product Line, Differentiation, Demographic Change, Customers…… Consolidating a Fragmented Industry • Creation of Economies of Scale • Standardization by Innovation • Rectify the Problem of a Fragmented Industry by Looking at the Causes. For Example Diseconomies of Scale • Initiate Acquisition and Merger • Explore and Investigate the Industry Trends in terms of Customer Needs and Innovation • Firms that Cannot help Consolidating an Industry are the Ones with Lack of Skills, Myopic, not Aware of the External Environment, and Organizationally not Ready

Question 1

            In a market, the strength of competitive strength is calculated by the expenditure flows through the market and the returns flows out. The sector should also have the capacity to maintain the average returns described above. The economic powers of Porter dictated the competition and viability of the business. In nature, all of the five powers are interdependent. If a competitor may have a firm grip on the business in which new entries are not a danger, but faces a danger from an existing business in that sector from a low-cost alternative product, it reduces the future returns.

1. Threat of Entry- This force explores the extent of difficulty in the business for rivals to enter the competition. The threat of penetration is low if barriers are strong and vice versa. Total cost savings, input control, economies of scale and name awareness are obstacles to entry. For origins of obstacles to entry, the following are:

• Product Differentiation: Whether it maintains high brand awareness, consumer loyalty or is first in the market, the company's commodity is distinguished (Huggins & Izushi, 2018).  Differentiation poses an obstacle for prospective new entrants that they will have to spend significantly on advertising, overcome current consumer loyalties and, if the entrance struggles, may become risky in terms of investments.
• Cost Disadvantages Independent of Scale: Patented commodities or the confidentiality of current market expansion provide cost benefits that are irrespective of economies of scale achieved. The existing businesses are now locking up favourable connections to raw materials and sites, which renders it impossible for the latest entrant to connections those they require and results in higher costs.

• Government Policy: A high obstacle to entry can be government and administrative standards, such as approvals and licenses. It may also restrict access to raw materials such as coal-fired land.

1. Rivalry Among Existing Firms- The business competition aspect has a major influence on the practices of an organization because it directly impacts earnings. Rivalry happens mainly to boost the role of the organization and to achieve strategic edge. Price cuts are easily followed by competition who decrease the return in prices. The following are several variables that can clarify the cause of current corporations' rivalries.

• Balanced Competitors: A larger challenge to competitiveness is imposed by multiple entrants with similar amounts of goods or service. Companies can participate in aggressive practices to achieve greater market share in order to minimize the danger.
• High Fixed or Storage Costs: In order to reach economies of scale, high fixed costs impose demand for all businesses to generate maximum power. Price drops are implemented in order to clear the stock, which contributes to poor revenues.
• Lack of Differentiation or Switching Costs: When the good is standardized and undifferentiated and regarded as a service, price-based rivalry takes place.
• Diverse Competitors: The multiple competitors who have distinct objectives and tactics for how to succeed may alter the essence of competition. Strategic options for one opponent could be correct, whereas the other may be incorrect.
• High Exit Barriers: Any firms are generating low income and seek to flee the market. Financial, strategic and emotional variables, though, make it challenging for the organization to leave. Excess ability does not abandon the business while exit barriers are high, and businesses who fight the war do not give up.

2. Threat from Substitute Product- A business must continually take a peek at the goods of rivalries. If not, some enterprise will come up with a replacement product and in the market that can be a big challenge. At a technical stage, replacement product danger is very important: 1) functionality 2) creativity 3) productivity 4) consumer relationship. Company A and Company B, for instance, offer the same form of commodity, so if Company B gives more attention to producing a product that relates to consumers or offers superior customer support or better functionality or greater performance, it threatens to substitute Company B with a better usable product. If a customer has few to no swapping costs, so the danger from the substitution commodity is high. Brand loyalty and distinction may be the key cause of the danger from the replacement commodity becoming unpredictable. The Nike corporation, for instance, launched Air Nike sneakers, and so did Puma. While Nike's brand loyalty is higher, consumers would likely purchase more from Nike than Puma. The business has to remain involved and innovative to look past conventional rivals in order to detect possible risks.

The 5-force study of Porter in the Swiss watch industry was one of the powerful competitions in the watch industry. Below is the study of Porter's powers at the Swiss watch firm.

1. Threat of New Entrants-The challenge of new competitors is considerable. The cost of watches from China is poor on the market. In low labor and low cost nations, new entrants will manufacture watches by imitating the Swatch style. The best way for the watch business to play well is by brand value and consumer satisfaction.

2. Rivalry between existing companies - In this market, rivalry is fierce. Every brand is developing its image, philosophy and storytelling in the watch industry. In order to draw consumers to the business and even engage new potential customers, businesses compete by strong marketing strategies. The Swatch Company’s main rivals were Bvlgari and Rolex.
3. Threat of Substituted- Products the laws of the watchmaking business have modified for smart phones (Porter & Kramer, 2012). In terms of replacement items, such as cell phones, MP3s, tablets or other portable gadgets, the danger is high. Nowadays, through their mobile gadgets, citizens access time and wear watches has become almost of a trendy item. Cell phone companies including Apple have recently created I Watch digital watches that mainly sabotage the watch industry and also
4. Bargaining Power of Buyers-The watch industry offers watches with numerous types of functions that consumers have choices to prioritize: price, cost, design, and size. Many designer watches are open to consumers, but they do not have power over the producers of watches. The expense of swapping is large since the customer does not jump from a medium-priced watch firm to Rolex watches. In the watch industry, brand recognition, consumer satisfaction and quality differentiation often benefit the Swatch group. Therefore, the buyer's purchasing power is comparatively poor.
5. Bargaining Power of Suppliers- Through vertical integration, the Swiss-made watch business has advanced and owns the facilities to manufacture mechanisms. Here, manufacturers had little purchasing leverage. Companies such as Gucci or Ice Watch, though, ought to request watches from their manufacturers. Thus, manufacturers have the right to negotiate rates and timetables.

Question 2.

In June 1981, when there was no multichannel setting, UTV History United Television and Software Company Limited (UTV) was India's first cable TV service. The CEO went on as well and joined the film industry. Through launching a multinational film distribution network of offices in the United States, the United Kingdom, the Middle East, and Mauritius, UTV has also extended its operations. The UTV management discovered in 2003 that there was a huge opportunity in the division of the kids' net. The aim was to lift operating revenue and get UTV to Rs10 billion (US$ 200 million) by 2010. There are some options explored by the panel:

• Expand the Indian consumer base of UTV and ramp up operations in an established vertical and launch a new vertical.

There is a increasing trend in researching the strategic factors that influence an organisation. The study of Porter's 5 Forces deals with variables beyond a market that impact the dynamics of competitiveness within it.

1. New Entrants' Threat: UTV was the first cable TV in India to run. Owing to high manufacturing and entrance costs in the entertainment sector, the introduction of a new rival is low (O’Shaughnessy, 2016).  New entrants need large capital and, because of the mature sector, it is often challenging to learn about the sector in a short period. From 1990 to 2006, UTV as a whole earned benefit. The net profit for the 2005 financial year was 16.31. UTV appreciated their customers ' brand interest as it continually innovated in terms of producing programming for the multiple age groups.

2. Rivalry among established companies: UTV's Hungama TV had several rivals. The rivalry amongst emerging companies has been strong. In the fragmented market, UTV categorizes and hence seeks a path to contend against its competitors by joining hands with foreign networks.

3. Buyers ' negotiating power: Customers ' bargaining power is strong and they can move networks (low switching costs). Globalization has increased and the power of consumers to demand new products has also increased, placing a lot of strain on the UTV team to produce new content. For audiences whose switching costs remained comparatively modest, there were several viable alternate forms of content.

 4. Supplier negotiating power: UTV has provided television programming for many television channels in India. There were also other service suppliers in the broadcast sector besides UTV. Which results in poor negotiating leverage for providers. It was the middle end of the value chain, even though UTV offered creative content. In the content-creation industry, the expenditure criteria and risk were minimal, and the return on this industry was also minimal.