Porter's Five Forces is a framework for the industry analysis and business strat egy development formed by Michael

E. Porter of Harvard Business School in 1979. It draws upon In dustrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combinati on of these five forces acts to drive down overall profitability. A very unattractive indust ry would be one approaching "pure competition", in which available profits for all firms are driven down to zero. Three of Porter's five forces refer to competition from external sources. The re mainder are internal threats. Porter referred to these forces as the micro environment, to contrast it with th e more general term macro environment. They consist of those forces close to a company that affect i ts ability to serve its customers and make a profit. Porter's five forces include - three forces from 'horizontal' competition: threa t of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. 1 1 The five forces are: o The threat of the entry of new competitors o The intensity of competitive rivalry o The threat of substitute products or services o The bargaining power of customers (buyers) o The bargaining power of suppliers Most of the industries and business firms want to establish in this competive ma rket. To establish well in this competitive market they have to face internal and exte rnal forces. To overcome from those forces and for their existency in the market they create competitive intensity and increase attractiveness of their products. Profitability depends on attractiveness. Bangladesh Steel Re-rolling Mills Ltd (BSRM) is one of the top ranked steel comp any in the market of Bangladesh. BSRM had been Building the Nation since 1952 . The BSRM Group of Companies traces its origins and inception to a set of 4 small manual rolling mills in Nasirabad, Chittagong. The mill produced reinforcing bar s and structural sections. The mill gradually expanded, adopting new technology by set ting up a cross country European mill in 1987 which included a wire-rod mill. In 1996 th e group added a captive billet making plant to ensure a steady supply of quality billets for its rolling mills. BSRM company also competes among other steel companies by keeping those forces i n mind that affect its ability to serve its customers and make a [Link] the other ha

nd , these technology allows to compete with the competitors and maintain a standard of the product. BSRM use different technology and for this an employmen t opportunity is created at the same time they are in the growth stage. Thats why BSRM is the first choice of customer and are dominating the market. The five forces: The threat of the entry of new competitors: Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will fall towards zero (perfect competition). [Link] existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit eas ily. [Link] of product differences [Link] equity [Link] costs or sunk costs [Link] requirements [Link] to distribution [Link] loyalty to established brands [Link] cost [Link] profitability; the more profitable the industry the more attractive i t will be to new competitors The intensity of competitive rivalry: For most industries, the intensity of competitive rivalry is the major determina nt of the competitiveness of the industry. [Link] competitive advantage through innovation [Link] between online and offline companies; [Link] of advertising expense [Link] competitive strategy [Link] visibility of proprietary items on the Web used by a company which can int ensify competitive pressures on their rivals. There are different technologies that BSRM use which are Information based techn ology and advanced manufacturing technology(AMT) to protect from [Link] applies to products and services. Their products and servi ces are extremely good enough to compete. Their price,quality and innovation like BSRM Xtreme 500W of 6 0 grade steel that are new technology can be able to charge higher prices and achieve higher p rofits until competitors imitate them. The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the

propensity of customers to switch to alternatives: [Link] propensity to substitute [Link] price performance of substitute [Link] switching costs [Link] level of product differentiation [Link] of substitute products available in the market [Link] of substitution. Information-based products are more prone to substitutio n, as online product can easily replace material product. [Link] product [Link] depreciation Once BSRM was the only rerolling steel mill industry in Bangladesh. But at the c hange of civilization and moderization the market are growing and became [Link] lessen the cus tomer propensity, relative price level,sub-standard product etc. to substitute,BSRM company has be en increasing their business strategy and improving attractiveness of their [Link] as-during 1987,they introduced AST615 60Grade reinforced steel [Link] this process the last innovation of that compan y is-BSRM Xtreme 500W which is international standard. The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: th e ability of customers to put the firm under pressure, which also affects the customer's sens itivity to price changes. [Link] concentration to firm concentration ratio [Link] of dependency upon existing channels of distribution [Link] leverage, particularly in industries with high fixed costs [Link] volume [Link] switching costs relative to firm switching costs [Link] information availability [Link] to backward integrate [Link] of existing substitute products [Link] price sensitivity [Link] advantage (uniqueness) of industry products Most of the people want their construction should strong last [Link], customer will not bargain rather than quality of the product. BSRM has acheived faith that buyer will not switch to ot her substitutes. BSRM contributed nearly Tk.100 crores the national exchequer in taxes,levies,duties and [Link] report of a year can make understand that how many buyers they have in this competitive market. The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Sup pliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources. [Link] switching costs relative to firm switching costs [Link] of differentiation of inputs

[Link] of inputs on cost or differentiation [Link] of substitute inputs [Link] of distribution channel [Link] concentration to firm concentration ratio [Link] solidarity [Link] competition - ability to forward vertically integrate and cut out the buyer Advanced manufacturing technology has coincided with a major remodelling of the manufacturer s supply chain. For supply chain management Just In Time method is used. This techniques allows them to get the raw materials whenever it is needed. For this they have to make good relationship with the suppliers of the raw [Link] uses Electronic data interchange for mak ing the communication with the required [Link] often uses Internet for developing a Wide Area Netw [Link] the mejor suppliers of their product is foreign country s supplier so it is neccesary to use the internet in order to make communication with them.

References ^ Michael Porter, Nicholas Argyres, Anita M. McGahan, "An Interview with Michael Porter", The Academy of Management Executive 16:2:44 at JSTOR ^ Rainer and Turban, (2009), Information systems and the modern organisation. In Introduction to information systems ( 2nd Edition, Ch 2, pp 38-39), Wiley ^ Michael E. Porter. "The Five Competitive Forces that Shape Strategy", Harvard Business Review, January, 2008, p.86-104. PDF