Use Porters Five Forces Model to analyse your industry.
Threat of new entrants
In most industries, and especially in the Electrical Transformer industry, a new company cannot enter the market at an equal level with those of already established companies due to the number of barriers that exist, that will prevent them entering on equal grounds, some of these are as follows, · The cost of a new company staring up would be so large due to the large amount of new technologies, research and development and qualified staff that an established company would have at their disposal. · Most of the customers in our market, would be consider to be loyal due the number of years that we have been doing business with them. A lot of the larger companies would be tied into lengthy contracts, spread over the next three / four years, for them to breach these contracts, they would be obliged to pay large fines and lengthy penalties · Both Vendors and Customers our based in mainland Europe so new law’s restricting both weight of loads and number of hour’s truck drivers can travel will weaken global company compared to European rivalries. · Most of our existing competitors are well established with a very good customer service and long term contracts, thus leaving it difficult to mussel in on there business. · New companies are however appearing all the time from all around the world offering larger discounts than any of the companies in Europe can, they can offer these large discounts due to a number of different reasons, the cost of labour is significantly lower than what it would be in Ireland or Europe. The cost of energy, land, infrastructure all help these companies to manufacture at such a low price. The local Governments allowing the exploitation of the work force, child labour, poor conditions etc. · Alternatively for some of the larger Organisation in the world that have large amounts of finances to back them up...
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