International Institute of Planning & Management

Business Policy & Competitive Strategy

Assignment: Porter’s Five Force Model

Submitted By:-
Rohit Dhaula
Roll No. - 33
Batch: - FW 08/10
Gurgaon

Porter’s Five Forces Analysis For The Organization

The assignment consists of the Porters five force model which I have applied on
the BBA group and in addition to it PEST analysis is also done to make it clearer.
The BBA Group has been established in 1897 as a textile manufacturing industry.
The Porter’s Model can be seen in the figure.

The Porter’s 5 forces analysis is a framework for industry analysis and business
strategy development. Five forces - bargaining power of customers, the bargaining
power of suppliers, the threat of new entrants, and the threat of substitute products
-- combined with other variables to influence a fifth force, the level of competition
in an industry.

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Introduction
Every business is subject to factors that affect the firm’s function as a
whole. These factors are the ones attributed for the success or even the failure of a
business. In the light of this, there are certain ways or techniques to be considered
in order to emerge and continue to be competitive within the market place. The
marketing concept has been defined as ‘the key to achieving organizational goals’
and the marketing concept rests on ‘market focus, customer orientation,
coordinated marketing and profitability’. In a profit making business, the firm
obviously has to try and achieve this level of customer satisfaction as a way of
staying ahead of the competition and making a profit.
Today, more and more people and organization are striving to be recognized
in the business arena. With this objective, these organizations had been able to
competently and effectively adapt to the situation in the market place by using
generic strategies that enhanced their competitiveness. There are five different
generic strategies that a business can choose. These include cost leadership,
differentiation, focused cost leadership and integrated cost
leadership/differentiation. Each generic strategy helps the company to establish
and exploit a competitive advantage within a particular competitive scope.
So, this assignment consists of the generic strategy, PEST analysis and
Michael Porter five force model which has been used on BBA Group.
Overview of the Company
BBA Group has been established in 1897 as a textile manufacturing
industry. At present, BBA groups operate in a global market in two distinctive
areas of business. First the aviation service systems which consist of Aviation
Services and BBA aviation systems, through its subsidiaries in Latin America, US
and Europe. This division provides fuelling and refuelling services, cleaning,
maintenance, aircraft sales, servicing, repair, technical support and training of
pilots. Next, BBA develops specific material for different industrial and hygiene
sectors. Herein, they provide non-fabric products by the mechanical
interweavement of textile fibres for the manufacture of sanitary towels and babies
nappies. This business division also specializes in embossing activities for printing
original colour motifs like kitchen paper.
BBA Group is publicly recognized company traded on UK stock exchange.
The companies involved in such group focus on providing products and services to
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aviation industries and speciality materials industries. The aviation services and
systems groups serve regional airline, commercial and military aviation clients and
world business aviation by it primary operating industries and their subsidiaries.
Some of these industries are Signature Flight Support, International Turbine
Service, Dallas Air motive and others. The aviation division of BBA is known to
be the 5th largest aviation groups in UK and amongst the top 40 largest industries in
the world market.
Furthermore, BBA is also a vital player in the aviation support business.
Such group has business operations at over 100 locations in the international
market including 46 of the world’s top 100 airports. Part of the company’s
business is joining mergers and acquisition. Such strategy helped the company to
expand its business portfolio and expand their territories in the global market.
Utilizing PEST Analysis
In order to analyze the environmental aspects of BBA Group, PEST analysis
will be used. PEST Stands for Political, Economic, Sociocultural and
Technological factors.
Political Sector
A company will not be able to gain success, good reputation and trust
if it will not consider legal and political sector as part of their strategy. BBA
Group has been able to follow the principles of business ethics. Hence, the
company considers legality in all their actions. They make sure that all their
products and services adhere to the standards and wills satisfy their client
worldwide.
Economic Sector
Economically, it can be said that throughout the years, BBA Group
had enjoyed being at the top of its competitors. The economic status of BBA
is highly remarkable that it always give its consumers the best and quality
products and services in the two business divisions. In addition, the
company’s growth and expansion on different countries in the world is an
obvious evidence that BBA has been able to have a stable economic capacity
to sustain and maintain its competitive position in the market place.
Sociocultural Sector
Culture is an important factor in understanding an industry, because
for any organization to operate effectively, it must for some extent have a
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general set of believe and assumptions on how culture will influence the
productivity and the success or failure of any company. Culture environment
is one of the important principles that influence the organization. There are
four dimensions that differentiate cultures at a national level (power
distance, individualism-collectivism, masculinity-femininity, uncertainty
avoidance), which help to understand that people arrive to organizations
with their own national culture.
In the BBA, the management sees to it that they value the opinion of
their employees no matter what is their nationality. Since, this company is
competing globally; it cannot be denied that they need employees from
different cultures to be in the company to help in the decision making. It is
also indicated that the international managers has been able to create a
positive relationship in the local managers. Moreover, the management of
the company has seen to it that they would be fair in treating all their
employees. In addition, as mentioned earlier, the company sees to it that
their social commitment is being achieved by satisfying the consumers with
their quality products and services in aviation and special material
industries. Herein, the company values the consumer by knowing their
demands and providing their demands and in aviation and special material
products. The business division of BBA has been able to make the company
more competitive.
Technological Sector
The complexities of achieving business success through increased
efficiency, effectiveness and competitiveness, combined with innovative
applications of modern technology, has heightened the awareness of both
Technology and business managers towards more strategically oriented
approaches for planning and management of any industry. BBA has been
able to use technological advancement for creating new and innovative
products and services needed by its customers may it be from the aviation or
the special materials business. Part of this is their utilization of modern
technology in producing new products that will meet the demands of their
target market. They also use the purpose of information technology by
creating their own website to let their consumers have an easy access of
knowing the company and the products and services that the company has
made for them.
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Porter Five Force Model
An industry is a group of firms that market its products closely substituted
from each other. According to Porter (1980), some industries tend to become more
profitable and competitive than the others. Hence, an existing industry such as the
BBA Group based in UK should always remember that their industry will only
survive by utilizing a strategy that would enhance the competitiveness of the
business. In Porter’s model, it is assumed that there are five forces that particularly
affect an industry. The model is useful if a manager strives to get the better off
rivals. The framework provides excellent understanding of the industry context in
which the firm operates.
Porter’s Five Forces Model includes threat of entrance of new industries.
The main objective of BBA is to stay in the competitive position in the global
market Although, the company knew that this type of industry belongs to higher
entry barriers, the management has been able utilize an approach to make sure that
the company will still be competitive in the international level. In order for BBA
to compete and stay in the international marketing environment, the management
team had provided a long term vision to be followed by the industry as a whole.
The use of merging and acquisitions has been able to strengthen the capability of
the company to strongly and efficiently compete within the marketplace in both
local and international arena. The agreement made by BBA with these leading
industries has strengthened their capabilities to compete in the global arena in
terms of producing quality products and service especially for their aviation
systems.
Moreover, with the existence of new entrants in this kind of business, the
competition becomes tougher and tougher. Since, these new entrants can be a
threat for the company in terms of substitute products, BBA have again utilizes a
strategy that will enhance their product more. Product differentiation approach was
implemented by the company as their marketing strategy. This is to ensure that
with these new entrants their product will still be different, unique and full of
quality to satisfy their target market.
The bargaining power of a supplier could be a threat for the profit of the
company, and BBA management is aware of it. Since the company’s goal is to
provide the customers of their needs and expectations in terms of diamond
production, the company has been able to utilize all its resources. In addition,
BBA, also uses supply and distribution channel effectively.
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 Porter’s also include in his model the concept of the bargaining power of
Buyers. Hence, BBA sees to it that their clients will be satisfied in their products
with regards to aviation or special material products or service. According to the
management of the company, the Argyle fundamental premise is a simple as
achieving the core mission and objective by merely satisfying their customers and
clients. And lastly, BBA also considers the intensity of rivalry. In this manner, they
are willing to provide strategies and techniques in a way that their competitors will
see them as a tough competitor for the benefit of the whole organization. Since the
competition of these industries worldwide is very strong, BBA utilizes all their
resources to enhance the operation of the BBA and to be recognized as the leading
industry in diamond production. They also tried to include innovative marketing
strategy and used technologically advanced equipments to produce quality
diamond products.
Conclusion
Analysis shows that because of the management and marketing strategies
of BBA Group, they are still enjoying their competitive position and competitive
advantage in the global market. In addition, it also shows that part of the generic
strategy of the company is product or service differentiation and joining into
mergers and acquisitions. The company has been able to adapt to the marketing
environment because of its strong commitment of providing quality products and
services for both of their business operations.