5 Forces for Hero Honda

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PORTER’S FIVE FORCES MODEL FOR HERO HONDA PROJECT ON PORTERS FIVE FORCES MODEL FOR TWO WHEELER COMPANY HERO HONDA

SUBMITTED BY: MITHUN KUMAR PATNAIK ROLL NO:A3O6O1909082 MBA2009-2011 BATCH

BY MITHUN KUMAR PATNAK, AGBS HYDERABAD.

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AMITY GLOBAL BUSINESS SCHOOL BANJAJAR HILLS, ROAD N0:11 ADJECENT TO LAKE VIEW APPARTMENTS RELIANCE HUMSAFAR BUILDING HYDERBAD

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PORTER’S FIVE FORCES MODEL FOR HERO HONDA INDEX Contents…………………………………………………………………………………………………………………page 1. INTRODUCTION TO PORTER’S FIVE FORCES MODEL 2. ABOUT THE AUTOMOBILE SECTOR 3. INTRODUCTION TO HERO HONDA 4. PORTER’S FIVE FORCES FOR HERO HONDA 5. THREAT OF NEW COMPETITORS 6. RIVALRY AMONG EXISTING FIRM IN INDUSTRY 7. THREAT OF SUSTITUTES 8. SUPPLIERS BARGAING POWER OF CONSUMERS 9. KEY FACTORS ONFULENCING DEMAND OF THE 2-WHEELER 10. KEY FACTORS AFFECTING SALES OF MOTOR CYCLES 11. APPRECIATION ON PORTERS FIVE FORCES MODEL 12. BIBLIOGRAPHY

BY MITHUN KUMAR PATNAK, AGBS HYDERABAD.

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1. PORTER'S FIVE FORCES

PORTER’S FIVE FORCES MODEL FOR HERO HONDA A MODEL FOR INDUSTRY ANALYSIS

The model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure. Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Diagram of Porter's 5 Forces

BY MITHUN KUMAR PATNAK, AGBS HYDERABAD.

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I. Rivalry

PORTER’S FIVE FORCES MODEL FOR HERO HONDA

In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences. Economists measure rivalry by indicators of industry concentration. The Concentration Ratio (CR) is one such measure. The Bureau of Census periodically reports the CR for major Standard Industrial Classifications (SIC's). The CR indicates the percent of market share held by the four largest firms (CR's for the largest 8, 25, and 50 firms in an industry also are available). A high concentration ratio indicates that a high concentration of market share is held by the largest firms - the industry is concentrated. With only a few firms holding a large market share, the competitive landscape is less competitive (closer to a monopoly). A low concentration ratio indicates that the industry is characterized by many rivals, none of which has a significant market share. These fragmented markets are said to be competitive. The concentration ratio is not the only available measure; the trend is to define industries in terms that convey more information than distribution of market share. If rivalry among firms in an industry is low, the industry is considered to be disciplined. This discipline may result from the industry's history of competition, the role of a leading firm, or informal compliance with a generally understood code of conduct. Explicit collusion generally is illegal and not an option; in low-rivalry industries competitive moves must be constrained informally. However, a maverick firm seeking a competitive advantage can displace the otherwise disciplined market. When a rival acts in a way that elicits a counter-response by other firms, rivalry intensifies. The intensity of rivalry commonly is referred to as being cutthroat, intense, moderate, or weak, based on the firms' aggressiveness in attempting to gain an advantage. In pursuing an advantage over its rivals, a firm can choose...
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