Porter's Five forces model goes some way towards guiding managers how Essay

Porter's Five forces model goes some way towards guiding managers how to make capacity decisions under uncertain demand. Howev - Essay Example Porter’s Five Forces model, a strategic analysis tool, allows organisational leadership to examine consumer and supplier characteristics, market trends, and competitive activity to determine what market-related factors maintain the most probable characteristics to disrupt or otherwise impede strategic advancement. The PESTEL/SWOT template of evaluation allows a firm to examine its internal strengths and weaknesses, based on the tangible characteristics of the external market, including political, economic, and social forces relevant to the strategic plan and new business direction. An organisation cannot determine capacity without first understanding what dynamics of the internal and external market environment will demand either flexibility in operations or create some degree of resistance toward meeting a specific strategic goal. This report utilises data uncovered using Porter’s Five Forces model and PESTEL/SWOT to determine how a solar panel manufacturing company ca n assess new strategic commitments and ensure the organisation is aligned with market conditions to achieve profit success with key target markets. 2. Porter’s Five Forces Analysis There are five forces that influence or shape competition that include competitive rivalry, threat of new market entrants, the degree of substitute products on the market, as well as both supplier and consumer buying power on the market (Porter 2011). A solar panel manufacturing plant, in order to achieve a new strategic goal or market positioning strategy, must be concerned with establishment of a partnered and adaptive supply chain network (as one example) in order to achieve maximum business outputs. In this scenario, the plant management must examine whether the existing supply network is sufficient for adaptability to meet just-in-time demands (in a lean environment) or whether the supply partners are able to reduce their switching costs to defect to other high-profit-building buyers in the sa me industry. The framework of the Five Forces Analysis is to give the business a strategic snapshot of current, external market conditions so as to translate such findings into internal operational restructuring or human capital development (as two examples) necessary to achieve strategic results. Bennet and Rundle-Thiele (2004) remind the business world that the nature of today’s markets make it easy for competition to replicate existing products and services. The only feature of a business that cannot be replicated is the firm’s brand image (Nandan 2005; Bennet and Rundle-Thiele 2004). In the solar panel industry, products are largely homogenized, meaning that they have similar features, benefits, pricing and function that are easily replicated by competitors maintaining strong capital resources and manufacturing know-how. This is why, to this industry, the degree of competitive rivalry as well as consumer characteristics are so vital to establishing a strong competi tive edge. Porter (2011) iterates the importance of understanding the potential risks of buyer brand defection. In the solar panel industry, consumers have a great deal of buying power. This market is characterised by concentrated markets, where there are actually few buyers that maintain the majority of market share (Porter 2011). Further, solar