I am the owner of a Melbourne based Nepali Hemp Product
Company. With the help of Porter’s Five Forces, I am able to view my impact on
the market. Porter’s Five Forces model identifies and analyzes five competitive
forces that shape every industry, and helps determine an industry’s weakness and
strengths. These forces are:
1. Competition in the industry
In Melbourne, there are two other companies (Decon, THC
Free) that are involved within the same market as me. Since they are a threat
to my company, I will have to analyze each and every move my competition makes
in the market. I can track their number of products, delivery time estimates,
customer support quality. I could examine how much they’ve invested in
advertising and promotions. I could use the information to my benefit and stay
ahead of my competition. Companies can only survive by snatching customers from
2. Potential of New Entrants
The threat of new entrants in the Hemp Products Market is
minimal. However, in the occurrence of such events, I should be well prepared. Surely,
it is a type of market that attracts investors. I could stop the establishment
of newcomers by offering them a chance to franchise my business. If my
marketing team hears about a new company, they may pull together a task to
increase our promotions in the neighborhoods.
3. Power of suppliers
As a wholesale business, we buy our products in bulk from a
Hemp wholesale company based in Nepal. Our suppliers can easily drive up the
price of the goods. However, that is extremely fatal to our business.
Therefore, we must maintain a strong relationship with our suppliers. If more
of my competition is dependent on the same supplier, then more power the
supplier holds. So it is important for us to be willing to repay their
gratitude. We should be able to meet their standards and build a sustainable
relationship for future affairs.
4. Power of customers
This specifically deals with the ability customers have to
drive prices down. It is affected by how many buyers, or customers a company
has, how significant each customer is and how much it would cost for a customer
to switch companies. To survive, my company must do whatever it takes to keep
them buying from us and not to go to other suppliers.
5. Threat of substitutes
Competitor substitutions that can be used in place of my
company’s products pose a threat. For example, if customers rely on me to
provide hemp bag cleaning liquids that can be substituted with another liquid,
and this substitution is fairly easy and of low cost, my power can be weakened.