King of Shaves Case Study Essay Example | Topics and Well Written Essays - 2000 words

King of Shaves Case Study - Essay Example When a company is in operation, there are many risks eminent in the field. In this paper, King of Shaves Company is discussed in reference to Porter’s five forces model. It then takes a closer look at the shareholders, and maps them in reference to their value to the organization. Introduction Porters’ five forces model is a model framework proposed by Michael Porter which portrays the industry as being influenced by five forces. For any strategic manager and his team planning to develop an edge over the rival firms, they can effectively make use of this model to understand the industry context in which the firm operates. The following is the Porter’s five forces model Porter’s Five Forces Model and Its Purpose and Benefits to Business Intensity of rivalry determines the level of competition in the industry. Different industries have different levels of competition, which is of great importance to business strategic analysts. Economists use competition inherent in the industry in order to measure the level of competition rivalry. If the rivalry among firms in the industry is low, that industry is considered to be disciplined. Such discipline could result in the industry’s competition history, the role of the leading firm or essentially the general understanding of the code of conduct buys the industry players. Rivalry intensifies when a rival firm in an industry acts in a way eliciting a counter response by other firms, for example cutting costs of goods. There are a number of ways in which a firm can exploit to gain a competitive advantage over other its rivals, for example changing prices by the firm gives a firm a temporary advantage, improving products differentiation is yet another way of gaining advant age, using the channels of distribution in a creative way and exploiting relationships with suppliers. All these, if used in a proper way, are likely to improve the firms’ competitive advantage over its rival firms (Roy 2009, p. 28). Threat of substitutes refers to the risk a firm would likely face if customers decided to substitute goods with goods from other industries (Roy 2009, p. 29). Threat of substitute comes into effect when the demand for a particular product is affected by changes in the price for a substitute product. Increase in the availability of substitute goods increases the elasticity of demand due to increased alternatives to the consumers. A close substitute of a product makes it hard for the manufacturers to raise the price of the product. Threat of substitution comes from players outside the industry. According to Roy (2009, p. 26), buyer power is the overall impact of consumers on a producing industry. Strong power of buyers implies increased production levels and there by increased suppliers, thus creating a situation where there are a many suppliers supplying to a single customer. The advantage of such a market to the buyers is that they are the price determiners. However in reality, hardl y do such markets exist in the current business world, with only there being an existence of an asymmetry between the producers and buyers. Strong buyers are characterized by concentrated buyers who purchase a significant portion of the output and