Porters Five Forces

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| A Review of Almarai’s Competitiveness in the light of Porter’s Five Forces | by | | Hassaan Jamshed HND in Business Studies (2012-13) | 7 Oct 2012 |

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Contents
Introduction Porters Five Forces
Threat of New Entrants
Bargaining Power of Customers
Bargaining Power of Suppliers
Rivalry among Existing Firms
Threat from Substitute Products
Conclusion

Introduction
In 1977, HH Prince Sultan Bin Mohammed Bin Saudi Al Kabeer saw that the domestic market was growing and to satisfy its needs, Saudi Arabia’s traditional dairy farming industry had to improve itself. He guided and financed for his vision to become a success which led to many agricultural projects being launched. Initially it was just fresh milk and Laban processing, which later came to be an incorporate modern dairy farm and many exquisite processing factories.
Porter’s Five Forces
Michael E. Porter (a young Harvard university associate professor) revolutionized the business strategy field by writing an article in the Harvard Business Review in 1979. The concept which later on was named after the professor has transformed industry competition since then and continues to be the most important factor in understanding and coping with competition in the market. It tells us where power lies in a business situation. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry. Porter’s five forces are shown in a diagrammatic way as under:

Fig 1: Porter 's Five Forces Model

Porter’s Five Forces Analysis for Almarai
The Threat of New Entrants
When other dairy product companies e.g. Lacnor come in the market, there will be more competition for Almarai. Many of Almarai’s customers might buy from others now. The new entrants would have many barriers to entry before coming into the market. They would have to register the company and it is possible



References: Almarai, Anon, <http://Almarai.com/about-us/> [6/10/2012] Business Essentials, (2010), London, BPP Learning Media ltd. Harvard Business Review, (2008), The Five Competitive Forces that Shape Strategy, Cambridge, <http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1> [6/10/2012] Mind Tools, Anon, Porter’s Five itve For, Assessing the Balance of Power in a Business Situation, <http://www.mindtools.com/pages/article/newTMC_08.htm> [6/10/2012] Quick MBA, Anon, Porter’s Five Forces; A Model for Industry Analysis, <http://www.quickmba.com/strategy/porter.shtml> [6/10/2012]

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