This analysis focuses on the five forces identified by Michael Porter which influences an industry. These forces are: potential entrants (barriers to entry), threat of substitutes, bargaining power of buyer, bargaining power of supplier, and rivalry among the existing players. Understanding these competitive forces will help the management of Laba Bubble in determining its position in the laundry industry, as well as to determine the current profitability of the laundry market. Understanding industry structure is essential to effective strategic positioning. Defending against the competitive forces and shaping them in a company’s favor are crucial to strategy.
. Potential Entrants:
The barrier to enter the laundry business is HIGH. It is very easy for a new company to enter this kind of industry since there are only few entry barriers to overcome like:
Resources (Low capital to start up)
Government issued permits and licenses (can be easily obtained as long as requirements are complete) Good location (high traffic areas are easily identified) No special skills required ( One can easily master the operation by a comprehensive training)
. Threat of substitutes:
The threat of substitutes is MODERATE. Substitutes are the other forms or ways on which cleaning laundry requirement is met.
In-house laundry (when costumers opt to wash their own laundry in their houses by themselves, by their household helps or by paid “lavanderas”) Self-service laundry (laundromats that are usually coin-operated and can be done by the customers themselves) . Bargaining power of buyers
The bargaining power of buyers is LOW. Buyers or customers do not greatly influence the pricing of...