PROBLEM STATEMENT:
“The reduced productivity level of Red Star, the largest supplier of Ashmark is at the brink of bankruptcy which is forcing the engine manufacturing company to tailor new effective strategies.”
CASE ANALYSIS:
PORTER’S FIVE FORCES:
RIVALRY AMONGST THE INDUSTRY: (HIGH)
Despite the requirement of an abundant resource investment as the capital for initiating the operations, the industry has huge growth margins available for the existing companies who are already operating their business operations .The potential in the market is high which continuously motivates competitor companies to initiate innovative and effective maneuvers sustained by well-organized supply chain management and managerial skills. The rivalry amongst the competitors pose a constant threat to the organization for striving towards innovation and efficiency. The threat from the companies keeps the organization at vulnerable position, as they are forced to continuously work on new strategies for sustaining their stance in the industry.
The goal achievement process of the company is delicate as the changing in the industry will require the company to alter their strategies, resulting in prolonging the process of goal achievements. The rivalry between the competitors in the industry is leading the company towards tailoring and altering the strategies through which the company plans to achieve the aims and goals of the company. The long term and short term goals of the company are constantly challenged by the competitors due to continuous alterations to the industry parameters.
The competitors have created an intense competition environment in the industry. The competitors are continuously evolving and adopting to not only new strategies but also several amendments to the organization for achieving a higher level of sales and revenues. These acts of the companies in the industry are influenced by the huge potential present in the industry for gaining higher growth rates and revenue extraction.
THREAT FROM NEW ENTRANTS: (HIGH)
The engine manufacturing industry has huge potentials for growth and success which motivates the new entrants to make the move for entering the industry. The industry has huge possibilities for development and deals. This is sufficient of pull for new entrants to enter the industry and start their manufacturing operations. The new entrants considering entering the market should focus upon the volume of sales and profits the existing companies are generating. The main aspect of the industry is the efficient management of resources and manufacturing operations, which is ignored by a number of new entrants.
The surviving companies in the industry do not see the appearance of new competitors as a threat as the industry demands a high level of capital and resource center with the involvement of huge risk in procedure of the business operations.
The business operations are very fertile if well managed and tailored efficiently by the management of the company.With all these factors in mind the consequences of improper strategies and management can be lethal and the company might have to face huge losses and blows on its financial standings, which can easily challenge the existence of the company. The ratio of companies failing to survive in the industry is high as several organizations fail to keep up with the changing dimensions of the highly competitive industry.
A lot of capital is required for starting operation in the industry. Huge amounts are a need to initiate operations for engine manufacturing processes. Capital allocation and resource generation process is mandatory as the industry is capital intensive. The threat from new entrants is low and near to impossible. The industry has huge growth potentials but behind the doors of the successful companies of the industry are hidden the consequences, which the companies have to face for their survival in the industry.
BARGAINING POWER OF SUPPLIERS: (LOW)
A vast number of competitors exist in the industry providing the same set of products to the customers which results in an increased level of options for the clients. The bargaining power of suppliers is minimized due to the presence of numerous options and varieties for the companies. The firms can choose from a list of dealers which can supply the company’s merchandises and offerings on company’s terms and conditions. The dominance is tilted towards the companies involved in manufacturing engines.
Several suppliers have existed over the years in the industry and the number is ever increasing. Suppliers in the industry do not enjoy control as they are not involved in an industry which allows them to operate through a monopoly, which is a clear indication that the bargaining power of the suppliers is low in the industry. The presence of numerous suppliers provides the companies with lots of opportunities for selecting the most suitable supplier.Alist of several buyers provides the company with opportunities to negotiate on their own terms and conditions for being more productive in their business operations..............................
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