Analysis of Porter Maersk
Analysis of Porter’s Five Forces for Moller Maersk
(Analysis of Container Line Business) FIVE FORCES | 1. Threat of New Entrant is High | 2. Threat from Substitute is High | 3. Bargaining Power of Suppliers is Low | 4. Bargaining Power of the Buyers is High | 5. Rivalry Among existing Players is Low |
* Threat of New Entry
Every firm would love to invest in shipping industry due to large profits involved. However this would seem easy but practically it is lot more difficult and virtually impossible to establish in container line business. The problem pertains to large capital investments in form of vessel and container procurements and risk of operating vessels. Even if we take the examples of biggest companies like Maersk and APL we will see that it had taken more than 100 years for these companies to establish themselves today at this top level. While there can be threat from existing companies to expand into new sectors which would lessen the share of company operating in that region. For i.e. Maersk is generally operating in every part of the world, in certain regions it may be the only player operating in that case its profit margins from those operations would be enormous. However this profit can be severely affected if APL or MSC introduce their service in those regions, or the situation can be vice versa. If there are any new potential companies who would intend to jump into this sector with huge capital than other factors like licensing, government rules, regulations, policies are all secondary. Factors | Threat of New Entrance | | High | Moderate | Low | Capital Requirement | | | * | Profit Margin | * | | | Opportunity of Expansion in new sector | | * | | Economies of Scale | * | | | Switching Cost | | * | | Government Restriction | * | | |
* Threat of Substitution
Substitution factor is foremost important especially when something is going wrong in organization and
(Analysis of Container Line Business) FIVE FORCES | 1. Threat of New Entrant is High | 2. Threat from Substitute is High | 3. Bargaining Power of Suppliers is Low | 4. Bargaining Power of the Buyers is High | 5. Rivalry Among existing Players is Low |
* Threat of New Entry
Every firm would love to invest in shipping industry due to large profits involved. However this would seem easy but practically it is lot more difficult and virtually impossible to establish in container line business. The problem pertains to large capital investments in form of vessel and container procurements and risk of operating vessels. Even if we take the examples of biggest companies like Maersk and APL we will see that it had taken more than 100 years for these companies to establish themselves today at this top level. While there can be threat from existing companies to expand into new sectors which would lessen the share of company operating in that region. For i.e. Maersk is generally operating in every part of the world, in certain regions it may be the only player operating in that case its profit margins from those operations would be enormous. However this profit can be severely affected if APL or MSC introduce their service in those regions, or the situation can be vice versa. If there are any new potential companies who would intend to jump into this sector with huge capital than other factors like licensing, government rules, regulations, policies are all secondary. Factors | Threat of New Entrance | | High | Moderate | Low | Capital Requirement | | | * | Profit Margin | * | | | Opportunity of Expansion in new sector | | * | | Economies of Scale | * | | | Switching Cost | | * | | Government Restriction | * | | |
* Threat of Substitution
Substitution factor is foremost important especially when something is going wrong in organization and