Porter's five forces analysis of the Solar Bird Feeder company

¶ … five force analysis of a company called the Solar Bird feeder. The writer explores the meaning of a macro environment for the industry and uses this case study to illustrate the elements of a five competitive forces analysis.

MACRO ENVIRONMENT

Many elements go into the development of products and services. One of the first steps to good business planning is the analyzing of many factors that will have an impact on that product or service. Whether the impact will be direct or indirect that factor needs to be addressed so that proactive steps can be taken to incorporate it into the final plan. A key factor in the planning of business is the study of the Macro environment. The macro environment is a catch all phrase for the external factors that affect the company with regards to planning and performance. The factors that are involved in macro environments are elements that are beyond the company's control but must be examined, understood and analyzed so that their impact on the company does not come as a surprise or create negative reactions.

Some of the external factors that make up a typical macro environment include socio-economic, legal and technological changes. These elements are outside of the control of the company but do have an impact on the industry and the market.

In the instance of The Solar Feeder there are several macro environmental factors that need to be assessed.

One of the first macro environment factors that needs to be analyzed is the socio-economic factor. The company does not have control over the state of the nation's economy and how that economy impacts the individual consumer. Because the Solar Feeder is priced on the high end of the industry, the company must be mindful of the nation's socio-economic issues so that it can create marketing to balance any downswings. That may occur in the economy and the consumer's spendable income percentages.

Technological changes are another aspect of the Macro environment that can have an impact on this industry.

The Solar Feeder is made with copper elements and when the squirrel attempts to access the bird seed that is inside the housing unit the squirrel receives a small electric jolt. It does not harm the squirrel but instead it trains the squirrel by consistent responses to stay away from the bird food.

Technological changes that are completely out of the control of the company must be watched carefully as they could cause the competition to produce a more advanced and effective product.

In addition to concerns about the competition the technological changes that are out of the company control could also provide the ability for the Solar Feeder to be improved upon thereby boosting the company's profit margin or cost to build.

Additional macro environmental factors include the demographics of the consumer base, and the natural and regulatory forces at work.

Demographics are a significant aspect of any marketing plan. The demographics of a consumer base provide the company with the ability to target, price and sell the product. It is vitally important for businesses to understand the demographics of their consumers if they want to be successful.

In this industry the demographic information is important as the Solar Feeder is not a need item, it is a want item. The consumer does not have to have a Solar Feeder to sustain life however, for those who are interested in bird watching and bird feeding the demographic information of the nation will provide insight about how to market it to those who are conscious about the environment.

The illustration below displays the factors of the macro environment as they are interlaced and relate to each other.

A illustrated in Figure 5.

POLITICAL

Suppliers

Marketing Information System

Publics

Marketing

Product

Price

Control

ECONOMIC

Place

Promotion

SOCIO- CULTURAL

Marketing Organisation

Competitors

Intermediaries

The threat of substitute products being manufactured and sold

The fifth force is perhaps the most important one and is the needed to understand and analyze competition. The force is the competitive rivalry of others within the industry.

Within the Solar Feeder industry it is important to understand the elements of the bargaining power of the customers that purchase the product. The elements include the price of the purchase. If the purchase is significantly more expensive than a closely matched competitor's product the buyer could feasibly go to that company to make the purchases. Another aspect of this factor is the information available to the buyer about the Solar Feeder as well as the competition's products on the market. When buyers are aware that they have several options to choose from the buyer becomes in control of the bargaining power.

The availability of substitute similar products also come into play in the micro environment with regards to the Solar Feeder. The availability of substitute products is important to SCI because they are available but are of a substandard quality and of lower environmentally atheistic quality.

The bargaining power of the suppliers is another important micro environmental element of business. The Solar Feeder company must carefully maintain supplier lists with the most competitively priced materials because that has an impact on the product final cost. The supplier costs are something that the company has no control over but the company can help with what purchases it makes. Just as part of the Solar Feeder company has to contend with its buyer power, the suppliers of the Solar Feeder company must contend with ITS buyers, including the Solar Feeder business.

The other elements of supplier bargaining power within the Solar Feeder's micro environment include:

The presence of substitute inputs

The concentration of suppliers to firm concentration ratios

The cost of inputs relative to the product's final selling price

The volume importance that is provided to the supplier

The force of the five force competitive analysis that deals with new competition is an important aspect of any business including the Solar Feeder.

There are elements of this force that must be included for the force to become a serious threat to the Solar Feeder. Capital funds that are required to start up and maintain a business will be needed as well as access to the ability to distribute the product.

The Solar Feeder has learning curve advantage and the new entrant has to get up and running and then discover all of the elements that need to be changed through the mistakes that it makes during initial production and marketing.

The learning curve provides the Solar Feeder with a head start because as soon as the other company comes on the market the Solar Feeder is at an immediate advantage and higher level simply because it has already been in existence for several years and has built a relationship with its suppliers, advertising outlets and other areas of importance in manufacturing and sales of the product.

Brand equity is another issue that is involved in the micro environment and in this instance the Solar Feeder has a strong weapon against new entrants. It has the most well designed and environmentally friendly case of any of the current market feeders that work with an electric jolt system.

The threat of substitute products is a force within the micro environment that should be taken seriously as substitutes are often manufactured for much less money and therefore can be sold at a discount.

The important thing for the Solar Feeder to do to combat this particular force is to market the product with advertising that point out the superior elements of the Solar Feeder.

Threats include the buyers' ability and past proven habits of substituting products, and the level of product differences that is perceived by the buyers.

The Solar Feeder has many avenues to take when tackling the intensity of the competitive rivalry. The rate of industry growth is an especially important concern in the micro environment for the Solar Bird Feeder as the idea of bird watching is gaining in popularity as people become more in tune to the environment. This is a positive factor for the sales of bird feeders but also a negative element by way of creating competition for the Solar Bird Feeder.

The company can combat this particular factor by providing widespread marketing of its product and information to the consumer about why it is better than the other products on the market.

Below is a diagram of the five forces and how they are interlinked. It also illustrates how they are all linked to the center factor which is the competition in the industry rivalry. http://en.wikipedia.org/wiki/Porter_5_forces_analysis

CONCLUSION

The Solar Bird Feeder Company must create an analysis of the market and industry if it wants to remain competitive and viable in the growing bird feeder industry. In the analysis there are many factors to be considered including the elements of the micro and the macro environment issues. The Solar Bird Feeder Company must examine these elements so that it can plan to market its product in the best possible light as it moves forward in the industry.

One of the keys to success for any company is the constant evaluation of placement and strategy within an industry. The use of the Five Force Competitive Analysis (Micro environment) and the macro environment factors will provide a blue print for changes that are needed to remain competitive in the industry.