Five forces that Shape Industry

It was according to Michael Porter “ Awareness of Five Forces can help the company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack”

It was a Saturday class, and probably our last meeting in Organizational Behavior subject, which our group was assigned to discuss about the Forces that “The Five Competitive Forces That Shape Strategy” these forces are:

Threat of New Entrants:

New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition. New entrants in the industry of Education particularly here in our town is a big pressure on our institution, because it could decrease our enrollment. There once I heard that on our nearby Municipality particularly at Hinatuan, Surigao del Sur, there was a school who is trying to open an agriculture course, but it seems I think there would be a delayed, because it has a requirement upon on opening an agriculture course the institution should have at least 50 hectares of lot owned. And that requirement probably the barrier for their entry.

Power of Suppliers:

Powerful suppliers capture more of the value for themselves by charging higher prices, limiting quality or services, or shifting costs to industry participants. Powerful suppliers, including suppliers of labor, can squeeze profitability out of an industry that is unable to pass on cost increases in its own prices. Although here in second district in Surigao del Sur we are just only institution  offers agriculture course, but we are not capable of increasing the tuition fee, because we are a government school.

Power of Buyers:

 The flipside of powerful suppliers. Although in an institution the buyer considered are the “customer” are students the only power of the students only is to select course and avail privileges  offered by the institution.

Threat of Substitutes

A substitute performs the same or a similar function as an industries product by different means. Substitutes only exist if only our customers “ students” transfers to other institutions.

Rivalry Among Existing Competitors

The degree to which rivalry drives down an industry’s profit potential depends, first, on the intensity with which  companies compete and, second, on the basis on which they compete.

Our institution is located at 2^nd district  of Surigao del Sur, which is nearby to different Universities and Colleges in Butuan City and Davao City. Which means plenty of rivals.

As one major rival of our institution is the Caraga State University, which is located at Butuan City, because we have the same flagship course which is the agriculture.