A Water Concessioners Porters 5 Forces Analysis

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  • Topic: Public utility, Water industry, Natural monopoly
  • Pages : 2 (353 words )
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  • Published : February 25, 2013
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A WATER UTILITY CONCESSIONER PORTERS FIVE FORCES ANALYSIS

1. Rivalry among existing competitors- Low to Non-Existent. Since it is under concession agreement, there is no other water utility company that can engage any business similar to A Water Utility concessioner, unless granted by the government under special agreement and with full knowledge and approval of A Water Utility concessioner.

2. Threat of new entrants- Low to Non-Existent. Companies that may want to apply for the concession must first comply with government requirements and also must have a substantial amount of capital investment (around 6 Billion Dollars starting capital), not to mention the technical expertise to run and maintain a water utility company.

3. Bargaining Power of Supplier- Medium. Although the primary raw material of A Water Utility concessioner is water which is basically free, the materials used for distribution line maintenance and expansion are quite few. Though this is the case, A Water Utility concessioner still has a slight control on the pricing of these materials unless the raw materials for these items like resin, steel, alum coagulating chemical used in treating raw water), etc. increases.

4. Bargaining Power of Customer- Medium. This is due to the regulated tariff by the government under the MWSS Regulatory office which deals directly with A Water Utility concessioner.\

5. Threat of Substitute- Low. The small water refilling stations also get their water from A Water Utility concessioner. With regards to larger water bottling companies, this is just a small portion of the pie which A Water Utility concessioner can manage to absorb. Other than water for drinking purposes, there is no substitute for A Water Utility concessioner’s service.

In summary, the water service providing business of A Water Utility concessioner is very viable with very little or non-existing threats of new entrants and rivals, with a very manageable...
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