Question

Choose a major company and apply the five forces of Porter’s five force model. Assess the attractiveness of the industry that the firm is in and the firm’s opportunities and threats to its sustainability.

Answer 1

The company that we would be considering here is Alibaba which is the biggest business to business Ecommerce Company.

Porter’s 5 forces for Alibaba are:

• Competitive Rivalry is huge as there are a lot of organizations that are providing similar services at cheaper prices and Alibaba has to maintain the highest quality levels to ensure its strong market presence.
• Threat of new entrants is relatively low as the market has almost saturated and the customers have identified some loyal organizations and will not switch easily. Also the set up cost is quite high so new entrants would be quite reluctant to enter.
• Bargaining power so suppliers is also low as many big organizations are not there who order in bulk and hence the suppliers need to agree to the organization.
• Bargaining power of buyers is medium as some organizations offering similar services are there in the market but quality is maintained by only some and hence buyers have to choose among few only.
• Threat of substitutes is also medium as big companies having string financial background can enter the market but smaller firms cannot and hence people would be having lesser options to switch.

Hence as per the above explanation the attractiveness of the industry is quite good and bright.