Sample Essay

There are five forces that are associated with the porter analysis. These five forces are:

  1. The intensity of competitive rivalry
  2. The threat of the new entrants
  3. The threat of substitute products
  4. Bargaining power of customers
  5. Bargaining power of suppliers

The intensity of competitive rivalry: The rivalry actually depicts the competition in the industry. In this aspect firms usually identify their market share and they keep a track of the market share of their competitors. The cell phone industry especially the prepaid market is not considered as a disciplined industry because there is fierce competition between the organizations that are operating in this industry.

The threat of the new entrants: The industry of prepaid cell phones can be classified as a capital intensive industry and that is the reason why the entry of new players is quite difficult in this industry the prevailing players in the industry are considered as the core threat to prepaid phone organizations.

The threat of substitute products: The biggest threat to prepaid phone organizations is post paid organizations and companies that bound the customers to a certain contract which is linked with usage of services.

Bargaining power of the customers: In the prepaid cell phone industry the bargaining power of the customer is usually high because of the fact that there are many customers in this industry and the product can be replaced. In the similar manner the customers that are in this industry are usually price sensitive and they have relatively low margins (Recklies, 2001).

Bargaining power of the suppliers: In the similar manner it can also be said that the bargaining power of the suppliers is relatively high because there are relatively few suppliers in this industry. The switching cost is high and the organizations that are in this industry are actually experiencing economies of scale.

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