Panasonic Porter Five Forces Analysis
Panasonic Porter’s Five Forces analysis covers the company’s competitive landscape as well as the factors affecting its sector. The analysis focuses on measuring the company’s position based on forces like threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and competitive rivalry. Let us start the Panasonic Porter Five Forces Analysis:
Quick Glance:
Threat of New Entrants:
The threat of new entrants in the Panasonic Porter Five Forces Analysis can be explained as follows:
Panasonic is a multinational electronics manufacturing company, founded in 1918 in Japan. The company is known for creating and selling reliable electronic goods, operating in more than 50 countries across the globe. It requires an investment of billions of dollars to create manufacturing and sales setups for the diverse portfolio of products that Panasonic has to offer. This also requires regulatory clearances and market acceptance. Apart from it, presently, the supply chain networks across the world are in deep shortage of critical components like semi-conductors, which are required to produce these electronic devices. The challenge to find stable supplies of raw materials itself would demotivate people from investing in the electronics business.
Additionally, electronics sell by brand names, which takes years to nurture. This however discounts new players entering smaller markets in individual products and becoming a significant force in narrow range of products. E-commerce provides an opportunity for these newer players to create a brand and start attracting audiences. Therefore, we may conclude that the threat of new entrants is a moderate force to affect competitive landscape of Panasonic.
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Threat of Substitutes:
Below are the threats of substitute products of Porter’s Five Forces analysis of Panasonic:
Technology is always fast-evolving and substitute products can arrive relatively quickly to dominate the market. For example, in the speaker industry, the wired speakers were widespread, but Bluetooth technology came, not only bettering the available set of products, but also creating newer players who went on to dominate the market thereon.
Even within the technologies, the improvement rate has been significant. However, Panasonic has a competent R&D team, which can catch up with the innovations quickly. This still leaves the company vulnerable during the time lapse since the switching cost of the consumer is very low. Hence, we may conclude that the threat of technologically advanced substitutes is a very potent force to influence the competitive strategies of Panasonic.
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Bargaining Power of Customers:
In the Panasonic Porter Five Forces Analysis the bargaining power of the customers can be explained as:
Electronics industry provides customers with a range of options for every type of product they are looking to purchase. There are some companies, who constantly attempt to create better and more technologically advanced products. The honest approach of other smaller companies is to reverse engineer the products and release similar quality products at a big discount factor, because they are able to avoid the R&D cost to a great extent. Due to this phenomenon, the customer can always purchase comparable products at a much cheaper price, giving them power to choose. However, they are also looking for reliable brands when they consider long term utility, servicing, and availability of spare parts if need be. Online shopping websites make products of thousands of companies available for customers to select.
Therefore, the bargaining power of customers becomes a moderate to strong force when it comes to analyzing the competitiveness of Panasonic in the electronics industry.
Bargaining Power of Suppliers:
Following is the bargaining power of suppliers in the Porter’s Five Forces analysis of Panasonic:
Panasonic has a diversified portfolio of products, which are manufactured across the globe. The suppliers of the raw materials utilized are manifold, which offer undifferentiated products at competitive prices to the company. The supply of most of these raw materials is stable, except the recent semi-conductor shortage that is being experienced after the coronavirus pandemic. The company enters long term contracts with these suppliers, who are bound to supply good quality raw materials at contract prices, ensuring stability. The switching cost of Panasonic is very low, but the potential cost of losing a big client to these smaller suppliers is considerably high. This results in a major imbalance of power, tilting the strength towards Panasonic. Therefore, we can infer that the bargaining power of suppliers would be a weak force to impact the competitive environment of Panasonic in the electronics industry.
Competitive Rivalry:
The impact of key competitors in the Panasonic Porter Five Forces Analysis is as follows:
Electronics industry has a few major players, which have an expanded portfolio across categories. This includes Panasonic, Sony, Samsung, LG, among others. However, in the individual categories themselves, there are a few players who are considered experts in those products and control the market share, setting benchmarks for other companies. There are several smaller players and new entrants, which either enter an aggressive pricing strategy or target niches among the masses, thus continuing to penetrate the market. The customer always has plenty of options. The growth of online shopping facilitates these variety of competitors, which would have been challenging in brick-and-mortar model. The switching cost of customer is low, especially when there exists no ecosystem of products as is the case with Panasonic.
Therefore, it is safe to conclude that competitive rivalry is a strong force to consider when analyzing the competitive landscape of a diverse electronic manufacturing company like Panasonic.
To conclude, the above Panasonic Porter Five Forces Analysis highlights the various elements which impact its competitive environment. This understanding helps to evaluate the various external business factors for any company.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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