Page 82 - Agri-Business Management Handbook

PORTERS FIVE FORCES counter strategies that can be applied
in view of the competitive forces.
The five forces developed by Michael
Porter can also be used as a framework to Threat from
conduct a scan of the environment that the New
business operates in. The five forces are
bargaining power of suppliers, bargaining Entrants
power of buyers, threat of substitute
products, threat of new entrants and Bargaining Rivalry Bargaining
rivalry amongst the existing competitors. power of amongst power of
suppliers existing buyers
These forces are inter-related as indicated competitors
in figure 3.1. By understanding how these
forces affect our businesses, we are Threats of
able to formulate strategies that give us Substitutes
advantages over our competitors and
hencebecomelessexposedtocompetition. Figure 3.1: Forces Responsible for Industry
Competition
Table 3.3 shows how these forces can
affect businesses in general and the

Force Influence on Businesses in General Counter Strategies

Threat of Potential entrants with creative Keep tab with new
new entrants ideas and thirsty for market innovations so that new
share can lead customers away entrants do not seem to
from our businesses. overshadow you.

Maintain production of high
quality products.

Pursue strategies for
customer loyalty.

Bargaining United suppliers with more Ensure diversity of suppliers
power of bargaining power can charge so that switching suppliers
suppliers higher prices and lower our becomes easier. e.g. having
profits. several suppliers for the
same product helps your
business bargain on price
and quality

Offer supplier sustainability
services.

25AGRI-BUSINESS MANAGEMENT HANDBOOK |