Porters Five Forces Analysis †Chinese Fireworks Industry

Table of Contents Threat of new entrants Threat of substitute products Bargaining power of suppliers Competitive rivalry within the industry Bargaining power of consumers Conclusion References After carefully conducting Porter’s 5 forces analysis for the Chinese Fireworks Industry, the following rating was established.Advertising We will write a custom case study sample on Porter’s Five Forces Analysis – Chinese Fireworks Industry specifically for you for only $16.05 $11/page Learn More Porter’s Force Rating Threat of new entrants High Threat of substitute products Medium Bargaining power of suppliers High Intensity rivalry within the industry High Bargaining power of consumers Medium Threat of new entrants As it has been observed, the widely spread expertise and knowledge of fireworks manufacturing among the Chinese people has increased the chances of new entrants in the industry (Jiang, 2010). With the ma nufacturing of the fireworks having its origin at family-level, there are high chances of new firms to be established in the industry. As a result, there is high possibility that profitability in the industry will decline significantly as more firms enter into the industry (Porter, 2008). Threat of substitute products There are moderate chances of the products in the fireworks industry in China to be substituted. The technology adopted in the manufacture of the products is sustainable with the availability of the raw materials being of steady supply (Jiang, 2010). However, emerging technologies have given rise to nuclear-based explosives which are higher expensive that the ones made in the firms in the Chinese Fireworks Industry. With these nuclear-based explosives being less affordable than those from gun-powder, chances are moderate that the products in the Chinese Fireworks Industry will be substituted. As a result, the substitutability of products in the industry can be rated as ‘medium’ as shown in the diagram above (Porter, 2008). Bargaining power of suppliers With the widespread of explosives manufacturing skills among the Chinese culture, right from the family level, there has been sustainable supply of labor in the industry (Jiang, 2010). Further, the high availability of raw materials used in the manufacture of explosives in China has made the Fireworks industry posses high bargaining power of suppliers. As it has been observed, China’s fireworks industry is one of the potential suppliers of commercial explosives in the global markets as a result of the high bargaining power of the suppliers. With high level of expertise and wide availability of raw materials, the industry has been rated ‘high’ in the Porter’s industry analysis. Competitive rivalry within the industry With the availability of expertise in China for the manufacturing of explosives, high level of rivalry has been experienced in the industry (Jian g, 2010). Many firms have been established, with high level of innovations remaining explicit as firms seek to establish competitive advantage.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More As a result of high level of rivalry in the Fireworks Industry in China, firms have been devising powerful competitive strategies making the industry to remain dominant in the global markets. It is the high level of competition within the industry that has contributed to high level of competitiveness of the industry in the world markets (Porter, 2008). Bargaining power of consumers With the economy of China growing significantly over the recent years, consumer purchasing power has increased as well (Jiang, 2010). However, government regulations on the use of explosives has controlled the purchasing patterns, making the bargaining power of consumers in the industry be ranked as ‘mediumâ€℠¢. The dangers associated with the explosive devises, both to the environment and to individuals, can be attributed to the moderate bargaining power of consumers for fireworks products. Conclusion As it has been observed, the industry analysis of Chinese Fireworks Industry shows that the industry has the potential for better performance in the future. With the high level of rivalry, suppliers bargaining power and threat of new entrants, more innovations are expected in the industry as firms seek competitive advantage in their operations. However, consumers bargaining power and threat for new substitutes remain moderate, a situation which seems to regulate profitability in the industry as prices are largely controlled. References Jiang, R. (2010). The Chinese Fireworks Industry. Richard Ivey School of Business: Ivey Management Services. Porter, M. (2008). The five competitive forces that shape strategy. Harvard Business Review, Vol. 7(3), p.86-104. This case study on Porter’s Five Forces Analysis – Chinese Fireworks Industry was written and submitted by user Frankl1nSt0rm to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.