Competitive force: Porters Five Forces

Poters five forces model devised by Michael Poter to aid firm in analysing competitive forces
in an industry environment.

At first we analysis the five forces to identify the position of the company.

Is it Strong

Moderate

Weak

a) Bargaining Power of Buyers

Price Sensitivity:
Buyers are more prices sensitive when the product is undifferentiated but in the
BeximcoPharma, there is no undifferentiated products. When the products are
undifferentiated there islow switching cost here. Beximco Pharma has so many products such
as Napa Extra,Oseltamivir, Decomit, Nitrosol, Bexi gold,Dexiten,Atrizin,Napa DT, Ras,
Saritene,Nitaxide,Q-Respria 1, 2 etc all products Price are fixed. We know that in the field of
medicine sitebuyer feel reluctant to bargain.

Relative Bargaining Power:

Having the fixed Price of Beximco Parmas product so the buyers in the market have no
ability to bargain. They feel interest to buy on the showing price.

b)

Bargaining Power of Suppliers

Beximco Pharmaceuticals Ltd as supplier has a strong bargains power in Pharmaceuticals
Ltdcompanies. Because we have some unique features thus make us unique. We have IV
fluidmanufacturing plant, MDI plant and Oral solid dosage(OSD) plant. Beximco
PharmaceuticalsLtd have supported by owns backward and forward integration. Because
Beximco Pharmahave a own paper printing machine and plastic machine. The cover of the
medicine is madeby the Beximco plastic industries LTD. So it was backward integration of
Beximco Pharma.
c) Rivalry among existing firmsIndustry Growth Rate:
Beximco pharmaceutical is the accelerated medicine company in the pharmaceutical
industryin Bangladesh. The company has grown market share by taking share away from
otherplayers .They involve with export processing in 2005 and has able to grab market share
thanincumbent firms. The Pharma AIDS is the lower competitors in the industry and still
theycould not able to capture market share for the strong existing firms. As a result, price
wars the
firms inthe industry. Stagnant firms gains higher profit than that the i
ncumbent firms.

Concentration and balance of competitors:

The number of the industry and their relative size determines the degree concentration in
anindustry. Beximco Pharma, Squire Pharma etc are the largest company and leading
positionat the present time. They produce in a large scale and ultimately they are able to cut
the priceof the products. So small competitors can not able reduce the price then they have to
followthe largest firms pricing strategy and rules. As a result price wars among the existing
firms.But when the Beximco fights against the Square Pharma then there are no destructive
pricecompetitions among them.
Degree of differentiation and switching cost:
Beximco Pharma produces the various types products .The company more emphasis on
someimportant matters such as dimension of the product form, features,
performance,conformance, durability ,reliability as well as service dimension such as order
ease delivery,installation customer consulting and others. By considering this the company
has able todifferentiate the products in the market. Price is also important issues for switching
cost.Sometimes switching cost is high for customer loyalty.
Excess capacity and Exit barriers:
Beximco pharmaceutical Ltd. has able to fulfill the huge customer demands and also
earnabnormal profit.So there is a good advantage for the company to cut prices to fill
capacity.Government rules and regulations create the barriers to excess capacity for a firm but
when afirm enters in to the industry they can never leave from the industry as like. They must
bindto follow to the government policy for continuing their business operation.

b) Threat of New Entrants

Beximco Pharmaceuticals Ltd is earning abnormal profit. As we know the potential
forearning abnormal profit attracting new entrants to an industry. Beximco Pharmaceuticals
Ltdhas already established in the market.
Economics of scale:
Beximco Pharmaceuticals Ltd has listed in 1986. So, Beximco Pharmaceuticals Ltd gets
largecost advantage and facility from government. On the other hand, Beacon
PharmaceuticalsLimited face the choice of having either to invest in a large capacity which
might not beutilized right away or to enter with less than the optimum capacity and
BeaconPharmaceuticals Limited or Pharma Aids are at least initially suffer from cost
disadvantage incompeting with Beximco Pharmaceuticals Ltd.
First Mover Advantage:
Beximco Pharmaceuticals Ltd. Square Pharmaceuticals Ltd. always get the first
moveradvantage because it has already set industry standards and enter into exclusive arrange
meetswith suppliers of cheap raw materials as well as tax advantages. Beximco Pharma leads
all
over the country. On the other hand, the new entrants firm doesnt get these types of
facilities. First mover advantages are also likely to be large when there are
significantswitching costs for customers once they start using existing products

Access to channels of distribution and relationships:

Beximco Pharmaceuticals Ltd.has a limited capacity and Beximco Pharmaceuticals Ltd.
andSquare Pharmaceuticals are famous company. Distributors can easily sell their product to
thecustomer. Similarly, new consumer goods manufacturers find it difficult to obtain value of
the market and it is difficult to make relationship with the customers.
e) Threat of Substitute Product
Relevant substitutes are not necessary those that have the same form as the existing
products,but those that perform the same function. For example, Beximco Pharma produces
differentproducts. Napa is one of them for reducing the fever. On the other hand
Squarepharmaceuticals also produce ACE for reducing the fever. But the price of this product
isalmost same of these companies. So, customer buys sometimes NAPA and sometimes ACE.
Its a threat for the Beximco Pharmaceuticals Ltd. Having the reputation and goodwill of the
company is leading position among the pharmaceutical companies.