Question

submit two pages (i.e. around 1000 words) of a write-up on the application of Michael Porter's 5 forces to any tech sector. You may take any emerging tech sector of your choice- such as FinTech, EduTech, LogisticsTech, RetailTech, FoodTech, HeathTech, MedTech, RecruitementTech, HospitalityTech, Real EstateTech, Digital Transformation Consulting, RPA, etc. Your submission will be valued on the basis of novelty, contribution to the existing body of knowledge, and application of concepts.

Answer 1

Firstly we understand the Porter' s 5 forces model.​It is a framework for analysing a company' s competitive environment. The number and power of company' s competitive rivals, potential new entrants in market, suppliers, customers and substitute products influence a company's profitability.

It is a strategic management tool to analyse industry and understand the underlying levers of profitability in an industry.Porter' s 5 forces model focuses in- how FinTech Limited can build a sustainable competitive advantage in software and service industry. Managers at FinTech Limited can use not only Porter's 5 forces to develop a strategic position within software and service industry but also can explore profitable opportunities in whole software and services sector.

Application of Porter's 5 forces model-:

1. Threats of New Entrants- New entrants in this sector may bring innovative ideafor doing the task and can pressurise FinTech by offering low price strategy, reducing costs and providing new value proposition to the customers.

2. Bargaining power of suppliers- Most of the software companies buy their raw material from numerous suppliers. Powerful suppliers in software and services sector use their negotiating powers to extract higher prices from the firm.

The overall impact of higher supplier bargaining power lowers the overall profitability of software and service.

3. Bargaining power of Buyers-: Buyers are often a demanding lot. They also want a minimum price. They put pressure on FinTech Companies. The smaller and powerful the customer base is of FinTech company, higher the bargaining power of the customers and higher their ability to seek increasing discount and offer.

4. Threats of Sustainable Products or Services-When a new product or service meets a similar customer needs in different ways, industry profitability suffers.

Like; Dropbox and Google Drive are substitute to storage hardware drives.

5.Rivalry among the existing customers- FinTech Company operates in a very competitive software and services industry.

If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability.