Premium Essay

Porters Five Forces

In: Business and Management

Submitted By Brea93
Words 1397
Pages 6
Target Corporation was founded in 1902 by George Dayton. Target set out on a mission to provide an environment where customers can conveniently shop, while purchasing merchandise at affordable discount prices. Today, Target Corp. has accomplished their mission in creating a one-stop experience for customers by differentiating products (making them unique) and increasing the outstanding value. Target Corporation retails general merchandise such as household “essentials, including pharmacy, beauty, personal care, baby care, cleaning, and paper products; music, movies, books, computer software, sporting goods, and toys; electronics, such as video game hardware and software; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes.” (Yahoo Finance) The company’s customers include consumers and businesses in the United States, Canada, and India. Target Corp. serves its customers at store locations and through digital channels; Target.com.
The average market capitalization for Target currently stands at $51.91B. Target Corp. has experienced decreases and increase in revenue during the past three years. The industry is expected to continue growing at an average annual rate of 7.6% Target Corp. financial statements reflect the growth of this industry. According to Target income statement they have experienced financial growths and declines for the past three years. Revenue decreased by 2.8% from 2013 to 2014 and increased by 1.9% from 2014 to 2015. From year 2013 to year 2014 Target’s net income had a 34.3% decrease as well. The fluctuation in revenue and the decrease in net income are due to Target Corp. prices being higher then inventory. Target’s income statement shows that Target is not financially stable because they have not generated enough revenue to cover their expenses at constant…...

Similar Documents

Premium Essay

Porter Five Forces of Walmart

...Performance attributable to industry attractiveness Retailers purchase merchandise from manufacturers in large quantities for resale to consumers at a profit. The domestic Retail Store industry is mature and highly competitive. We can use the Porter’s five forces analysis to assess the attractiveness of Retail industry and its profitability in long run: Threat of New Entrants The number of independent retailers has been decreasing over the years; most of the retailers are chain stores nowadays. The vertical structure and centralized buying of the existing chain retailer established a competitive advantage that stops independent retailer to enter the industry. Also the difficulties for independent retailer to find favorable suppliers, rents and be competitive block the road for new entrants. Bargaining Power of Suppliers Suppliers have very little bargaining power in retail industry. Big retailer such as Wal-Mart have always been exploiting suppliers, a contract with WM can either make or break a small supplier. As a result, strict control by client and razor thin margin are normally what suppliers get. Bargaining Power of Buyers Individual customer has little bargaining power against retailers. Retailers won’t react accordingly unless customers all together demand a better quality at bargain price. Substitutes Retail is about dealing in a wide range of products and services. Instead of providing a substitute, retailers offering broader range and unique products......

Words: 280 - Pages: 2

Premium Essay

Ipad Porter Five Force

...iPad as well, etc. Hopefully, this will not prove to be a drawback. So far, storage sounds good. We could go on forever about the things we believe are good with the Apple iPad, and those that are not so good. Basically, the iPad seems to combine Apple’s best features with many of its restrictions. But we're going to save our energy for when it ships. In the meanwhile, why don’t you help us see what everyone thinks about this thing, what are the key points Apple has nailed, or failed to get right, and so on. Use the comments at will. With enough feedback from you, we'll be able to do another piece, based entirely on your comments. Reference: http://news.softpedia.com/news/Apple-iPad-Drawbacks-Advantages-133397.shtml Question 1 Porters 5 forces Analysis This section will evaluate the industry factors which shape the strategy of Apple. Presently Apple due to its strong position can govern the tablet market but still there are many factors which have needs to be analyzed before the iPad can become a true market leader.   Power of Suppliers: Apple has high power over consumers as they have partnered with big brands and therefore use monopolistic price policies. Their product is standard and can't be customized by others. The company is taking products from so many other companies and assembling it which has helped them to decide the prices   and high brand image is helping them to cash the price of advertising from theconsumers. The company has changed the......

Words: 5257 - Pages: 22

Premium Essay

Porters Five Forces

...Porter’s Five Forces Model Porter’s Five Forces is an economic model used to characterise industries and markets, and combine to make up the business environment. Porter explains that by studying the structure and underlying dynamics between these forces, Nokia can discover opportunities for improving their marketing strategies, along with determining the industry attractiveness, competitiveness and long-run industry profitability. These five forces are also known as "competitive forces". Michael Porter has identified five forces that are widely used to assess the structure of any industry, along with evaluating what drives competition. Porter’s five forces are: 1. Existing Competitive Rivalry 2. Potential New Entrants 3. Threat of Substitutes 4. Bargaining Power of Suppliers 5. Bargaining Power of Customers Existing Competitive Rivalry The most common and direct threat to a business or organisation is through their rivals and competitors. This usually occurs in a market that sells the same product or offers similar facilities and services, to a population of the same customer base. Overall, general markets are known and seen to be more competitive. The more firms that will operate in the markets the easier it will be for the customers to shop around. Even a minority of firms can dominate a market, for example, supermarkets; even they can cause intense competition. For example, “some forms of competition, such as price competition, are highly......

Words: 648 - Pages: 3

Premium Essay

Porters Five Forces Model

...deciding whether to switch career and become a farmer – he's always loved the countryside, and wants to switch to a career where he's his own boss. He creates the following Five Forces Analysis as he thinks the situation through: Figure 2 - Porter's Five Forces Example - Buying a Farm This worries him: The threat of new entry is quite high: if anyone looks as if they're making a sustained profit, new competitors can come into the industry easily, reducing profits. Competitive rivalry is extremely high: if someone raises prices, they'll be quickly undercut. Intense competition puts strong downward pressure on prices. Buyer Power is strong, again implying strong downward pressure on prices. There is some threat of substitution. Unless he is able to find some way of changing this situation, this looks like a very tough industry to survive in. Maybe he'll need to specialize in a sector of the market that's protected from some of these forces, or find a related business that's in a stronger position. Key Points: Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. With a little adaptation, it is also useful as a way of assessing the balance of power in more general situations. It works by looking at the strength of five important forces that affect competition: Supplier Power: The power of suppliers to drive up the prices of your inputs. Buyer Power: The power of your customers to drive down your......

Words: 371 - Pages: 2

Premium Essay

Porter Five Forces

...Porter's Five Forces Model: analysing industry structure Author: Jim Riley Last updated: Sunday 23 September, 2012 Overview of the Five Forces Model Porter identified five factors that act together to determine the nature of competition within an industry. These are the: Threat of new entrants to a market Bargaining power of suppliers Bargaining power of customers (“buyers”) Threat of substitute products Degree of competitive rivalry He identified that high or low industry profits (e.g. soft drinks v airlines) are associated with the following characteristics: Let’s look at each one of the five forces in a little more detail to explain how they work. Threat of new entrants to an industry If new entrants move into an industry they will gain market share & rivalry will intensify The position of existing firms is stronger if there are barriers to entering the market If barriers to entry are low then the threat of new entrants will be high, and vice versa Barriers to entry are, therefore, very important in determining the threat of new entrants. An industry can have one or more barriers. The following are common examples of successful barriers: Barrier Investment cost Notes High cost will deter entry High capital requirements might mean that only large businesses can compete Lower unit costs make it difficult for smaller newcomers to break into the market and compete effectively Each restriction can act as a barrier to entry E.g. patents provide the patent holder with......

Words: 1260 - Pages: 6

Premium Essay

Porters Five Forces

...Porter's Five Forces Model Applied to the Movie Rental Industry Tarleton State University Porter’s Five Forces Model Applied to the Movie Rental Industry Alex Boogren CIS-450 Holland Reviewed by: Kelsey Stone 2/18/2013 Porter’s Five Forces Model Applied to the Movie Rental Industry The movie rental industry has undergone a massive overhaul throughout the past decade in the way that they do business. Consumers now have the freedom to choose multiple different ways to rent their movies, whether it is from an online streaming service such as Amazon Prime, a movie rental kiosk like Redbox, or an old fashioned brick and mortar store. Because of this, I believe that the movie rental industry would be interesting to evaluate using the Porter’s Five Forces Model. Buyer power in the movie rental industry is extremely high right now. This means that consumers have many choices when deciding on where to rent movies from. Buyer power in this industry was relatively low until technology allowed for online streaming and automated kiosks to rent movies from. Since buyer power is high, competition is fierce in this industry at the moment. High buyer power lowers the attractiveness of entering the movie rental industry. The next force that will be evaluated is supplier power. Supplier power in the movie rental industry is considered high. High supplier power means that there are only a few places for a movie rental business to acquire their movies from.......

Words: 335 - Pages: 2

Premium Essay

Porters Five Force

...What is it? Framework/theory Porter's Five Forces of Competitive Position Analysis were developed in 1979 by Michael E Porter of Harvard Business School as a simple framework for assessing and evaluating the competitive strength and position of a business organisation. This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. Porter’s five forces help to identify where power lies in a business situation. This is useful both in understanding the strength of an organisation’s current competitive position, and the strength of a position that an organisation may look to move into. Strategic analysts often use Porter’s five forces to understand whether new products or services are potentially profitable. By understanding where power lies, the theory can also be used to identify areas of strength, to improve weaknesses and to avoid mistakes. Porter’s five forces of competitive position analysis: The five forces are: 1. Supplier power. An assessment of how easy it is for suppliers to drive up prices. This is driven by the: number of suppliers of each essential input; uniqueness of their product or service; relative size and strength of the supplier; and cost of switching from one supplier to another. 2. Buyer power. An assessment of how easy it is for buyers to drive prices down. This is driven by the: number of buyers in the market; importance of each individual buyer to the organisation; and......

Words: 790 - Pages: 4

Premium Essay

Porters Five Forces

...Introduction: In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E. Porter. It was his first HBR article, and it started a revolution in the strategy field. In subsequent decades, Porter has brought his signature economic rigor to the study of competitive strategy for corporations, regions, nations, and, more recently, health care and philanthropy. “Porter’s five forces” have shaped a generation of academic research and business practice. With prodding and assistance from Harvard Business School Professor Jan ‘ Rivkin and longtime colleague Joan Magretta, Porter here reaffirms, up-dates, and extends the classic work. He also ad-dresses common misunderstandings, provides practical guidance for users of the framework, and offers a deeper view of its implications for strategy today. In essence, the job of the strategist is to understand and cope with competition. Often, however, managers define competition too narrowly, as if it occurred only among today’s direct competitors. Yet competition for profits goes beyond established industry rivals to include four other competitive forces as well customers, suppliers, potential entrants, and substitute products. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry. As different from one another as industries might appear on the surface, the underlying...

Words: 11910 - Pages: 48

Premium Essay

Porters Five Forces

...Porter’s Five forces and SWOT analysis on Breadtalk in Singapore Introduction BreadTalk Group Limited is a bakery in Singapore and was founded in the year 2000, like any other business Breadtalk is in regular pressure to improve their levels of performance and efficiency, with this in mind, this essay shall give a comprehensive study of diverse aspects that have made it possible for Breadtalk to stay gainful despite the critical business environment. This shall be achieved by performing a comprehensive Strength, weakness, Opportunity and Threat (SWOT) analysis and Porters Five forces analysis. SWOT analysis Strength The concept of Breadtalk is exclusive and inventive and this differentiates the brand from usual bakeries in the market. Breadtalk has standardized the design across all branches and is widely recognized for its attractive and eye-catching layout. Breadtalk vends a large range of buns, bread, pastries and cakes which is a very unique concept from the traditional bakeries in the market; every retail channel of Breadtalk presents about 40 to 60 special items day by day. (Ball, 2012) The Breadtalk group has a chain of approx 40 retail outlets island-wide in Singapore, it has existence in countries like Kuwait, Oman, Jordan, Saudi Arabia, India and Bahrain and thus it has captured strong market interest, which has helped in increasing its brand awareness. Weakness Breadtalk products are priced slightly higher than the products of other bakers, which might...

Words: 306 - Pages: 2

Premium Essay

Five Forces of Porter

...The five Forces Competing for profits The term competence is not about to beat your enemy with a profit. But compete for a profit is more complicated than it seems. Is not just compete with your enemy but with other participants involved as customers, who jostle for good quality products at a good price. Compete with suppliers who prefer to be paid better and deliver fewer products and compete with producers who could replace at any time. The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into. With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations. These five forcers, the intensity of rivalry among existing competitors, the bargaining power of buyers (the industry’s customers), the bargaining power of suppliers, the threat of substitutes, and the threat of new entrants determine the industry’s structure. Before Porter, the prevailing framework for......

Words: 324 - Pages: 2

Premium Essay

Ibm and Porter Five Forces

...IBM and Porter’s Five Competitive Forces Alexis DiOrrio September 21, 2015 Wilmington University History and Financial Analysis IBM or International Business Machines is a well-known American Computer manufacturer, founded by Thomas J. Watson (Bellis, 2015). They are also known as the “Big Blue” after the color of its logo. The company has manufactured everything from mainframes to personal computers and has been extremely successful selling business computers (Bellis, 2015). What started the beginning of IBM’s history, was on June 16, 1911 when three successful companies merged together; The Tabulating Machine Company, The International Time Recording Company, and The Computing Scale Company of America. These three companies joined together and formed one company, The Computing Tabulating Recording Company. In 1924, Watson changed the company’s name to what we know today as IBM (Bellis, 2015). IBM began manufacturing calculators in the 1930s, using the technology of their own punch card processing equipment. The financed the invention of the Mark 1 Computer with Harvard University in 1944. By 1953, IBM was ready to produce their own computers, which began with the IBM 701 EDPM, which was their first commercially successful general-purpose computer (Bellis, 2015). In 1980, Bill Gates agreed to create an operating system for IBM’s computer for the home consumer. Once IBM had now stepped into the home consumer market it sparked the computer revolution. Below...

Words: 1366 - Pages: 6

Premium Essay

Porter Five Force

...Porter’s Five Forces Analyses Threat of New Entrants - Low According to Porter (1985), potential competitors in any market are faced with challenges that new entrants often have including sales channels, costs of conversion and funding needs. (Dr. Antony Michail, 2011) Throughout the recession Tesco has continued to invest into expanding the company and developing efficiencies, making it as competitive as ever to defend against the threat of new entrants (Datamonitor, 2010).The threat of a new competitor entering this sector is relatively low, due to the huge capital investment required to be competitive and establish a brand identity that stands out. Tesco and other large supermarket are able to purchase large volumes of goods in lower price. In contrast, smaller new entry companies are more likely to buy smaller volumes at higher prices. New firms also have to be aware that Tesco already have loyalty customers. All of which helps to protect them from the threat of new competitors. Therefore, the successful entry of new threats is minimal. Threat of New Substitutes products or services - High According to Porter (1985), the threat of substitute products and services offered by an organization depends on propensity of the buyer to substitute, switching cost that the buyer will incur, perceived product or service differentiation level, the number of substitute products or services in the market ease of substitution and quality depreciation among other factors. (Dr. Antony...

Words: 1107 - Pages: 5

Premium Essay

Five Forces of Porter

...Porter's 5 Forces Analysis • Threat of New Entrants. Because the biotech industry is filled with lots of small companies trying to hit the jackpot, the barriers to enter this industry are enough to scare away all but the serious companies. Biotech firms require huge amounts of funding to finance their large R&D budgets. Having ample cash is one of the biggest barriers, so when interest rates are low, or the equity markets are receptive to initial public offerings, the barriers are lower. Specialization also creates barriers. For instance, knowledge about cancer and heart disease is quite high, whereas a company focusing on something more obscure would likely have a low threat of new entrants because there are very few experts in this field. • Power of Suppliers. Biotech companies are unique because most of their value is driven by intellectual property. The nature of their business does not force them, unlike other industries, to rely on suppliers. Scientific tools, materials, computers and testing equipment is highly specialized, but the likelihood of these companies invading on their line of business is not very high. One snag is that marketing alliances have often proved to be problematic. Small biotech firms don't have the distribution capabilities to promote their new drugs, so they are forced to license their drugs to other suppliers. • Power of Buyers. The bargaining power of customers has different levels in the biotech arena. For example, a company that......

Words: 1041 - Pages: 5

Premium Essay

Porters Five Forces

...determining strategy, Porter's five-forces model looks at the strength of five distinct competitive forces, which, when taken together, determine long-term profitability and competition. Porter's work has had a greater influence on business strategy than any other theory in the last half of the twentieth century, and his more recent work may have a similar impact on global competition. Michigan native Michael Porter was born in 1947, was educated at Princeton, and earned an MBA (1971) and Ph.D. (1973) from Harvard. He was promoted to full professor at Harvard at age 34 and is currently C. Roland Christensen Professor of Business Administration at the Harvard Business School. He has published numerous books and articles, the first Interbrand Choice, Strategy and Bilateral Market Power, appearing in 1976. His best known and most widely used and referenced books are Competitive Strategy (1980) and Competitive Advantage (1985). Competitive Strategy revolutionized contemporary approaches to business strategy through application of the five-forces model. In Competitive Advantage, Porter further developed his strategy concepts to include the creation of a sustainable advantage. His other model, the value chain model, centers on product added value. Porter's work is widely read by business strategists around the world as well as business students. Any MBA student recognizes his name as one of the icons of business literature. The Strategic Management Society named Porter the most......

Words: 273 - Pages: 2

Premium Essay

Porters Five Forces

...Porter’s Competitive Forces Model Question: Why was allocated model developed? In the 1970’s, there was a change in market place of the industries. The industries were transforming from local sellers to global sellers. At that time the industries needed to know and strengthen their competitive position in order to survive in the market place. Competition was increasing because of the change in market place. Earlier, industries used to sell their products to the local buyers only. But lately, they had started selling their products globally. Thus, due to this change in the buyer community there was a need for industries to protect themselves against competition from other industries and achieve competitive advantage. (Kippenberger, 1996) Competitive advantage is like achieving a better place than competitors. The industries can achieve competitive advantage by proper formulation and analysis of their strategies. Michael Porter (1979) developed five forces model for strategy analysis and formulation. These forces analyze the opportunities available and threats to the industries. Thus the analysis helps the managers gain a better understanding of the strategies that are useful for industries to achieve their goals. (Kippenberger, 1996) Question: What is the model? Porter’s Competitive Forces Model is for strategy analysis. The model represents five major external forces that can affect a company’s profitability and competitive advantage. Threats of entry, Powerful...

Words: 1096 - Pages: 5