Presented to:Prof. Sandeep Surange

Presented by:Kusum Sonkar

Michael E. Porter

The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works.

Bargaining power of

Buyer

1. Are the buyers buying a huge volume?

2. How large are your buyers’ company?

2. How many companies are there for the buyer to choose from?

4. Do you depend only on a few buyers to sustain your sales?

5. How hard is it for the buyers to switch and use a competing product?

6. Are the buyers purchasing from you as well as your competitors?

•The leisure sector customer has very little or no power, the corporate segment posses the significant upper hand in this matter.

•The switching is also high as there are not many loyal customers, as the customers are travelers. Also there is no point in switching to other in terms of price as the prices are fixed by the government.

•The corporate buyers have a say in this as they frequently avail the facility and can emphasize on reducing the cost for the service. E.g of corporate buyers- big corporate houses, hotels.

Bargaining power of suppliers

Bargaining power of

Buyer

1. Are there substitutes for your suppliers’ products?2. Do your suppliers serve multiple industries?3. Do you have high switching cost to use another supplier?

•The major suppliers in this industry are Car dealers, fuel, skilled drivers, technology products.

•Car Dealers have low bargaining because there are many car dealers in the market so to attract the loyalty of the business they offer low price, high end model etc.

•Fuel suppliers have low to moderate bargaining power as there are quite a few suppliers in the market and also they cannot regulate the prices as this are regulated by the government.

•Also the Government is emphasizing in the use of CNG as it is cheaper and cleaner.

•Skilled drivers have a high bargaining power as they are on the rise, also there is unionization involved which overpower the business.

•Technology also has low bargaining power as the suppliers of the electronic meters, GPS navigation device, GIS navigation, television and also call center services are in large numbers.

Bargaining power of suppliers

Bargaining power of

Buyer

Threat of

substitutes

•Threats of Substitute in the Porter’s theory actually means goods and services that does similar functions.

•A close substitute is a potential threat to companies product..

•The biggest threat to the car rental service is the threat of substitutes. The biggest substitute is the public transport. It includes Local buses which have also provide luxury buses and are cheap and comfortable, Rickshaws, local taxis etc.

•Factors that differentiate Substitute with Car rental service are as follows:Price, availability of close competence in public transport, cheap , easy availability.

•With advancement in the technology the companies usually can setup the meeting via video conference rather meeting in person.

Bargaining power of suppliers

Bargaining power of

Buyer

Threat of

substitutes

Threat of new

entrants

•There is low customer loyalty•Products are nearly identical•Economies of scale can be easily achieved•Low amount of capital is required to enter a market

•The major threat to the new entrant is the initial investment, as more VC’s are investing in this industry the company might get significant sum with can have advancement in technology products innovation and a larger fleet of cars.

•Economies of scale would be a significant factor, the reason being as the industry is growing at a fast pace the economies which are available to existing players will be reduced.

•The profitability is also affected with entry of new players as this industry has low loyal customers when it comes to luxurious segment customers. Barriers to entry like the government regulations, skilled drivers etc affect the same.

Innovation in terms booking service products and facilities to the customers e.g the diamond customer will get a higher facility for using higher car miles, coupons etc. E.g. Uber has cashless service, Meru does cabvertising etc.

Bargaining power of suppliers

Bargaining power of

Buyer

Threat of

substitutes

Threat of new

entrantsCompetitive

rivalry

•Intense competition may lead to as rivalry. It occurs when one business or many business try to increase their market share.

•It may lead to.. price wars, Advertising battles, launch of a new product

•The competition among the players in this market will be high and rising. e.g.: Meru cabs, tab cabs, ola cabs, uber etc.

•Price is not a differentiating aspect of competition. People these days look for comfort, luxury, availability of the car etc.

•Other then the fleet of vehicles the cost of the company has increased on the tech products like mobile apps, websites and also on call center services to attain competitive advantage.

•Factors affecting the competitive rivalry are that there are few players in the market, Government fixes the price, there is a strong of the same.

The model is strong tool for competitive analysis at industrylevel.

It provides useful input for performing a SWOT analysis.