Porter’s 5 Forces Model

The Porter’s 5 Forces model can identify the effects on MicroFridge’s

ability to make a profit and serve its clients.

1. Threat of New Entrants : ?

 No strategic advantage in distribution network – It has
distributors, hypermarkets, supermarkets etc. as distribution
network but it did not apply proper strategy for marketing
its products or managing costs of production which may
negatively impact the industry by having any new entrant
which has all these strategies in hand.
 Agreement getting expired in 3 years – New market entries
can take place after the expiry of non-compete agreement
before which MicroFridge has to make a good image so that
nobody can take over.
2. Threat of Substitutes : High
 Low innovation in the products – There are always
alternatives or substitutes in every product of any industry.
These substitutes can be classified into direct or indirect –
The direct substitutes are the similar products but produced
by different industry, the indirect substitutes are the
products which are of different kind and that can replace the
product for MicroFridge.
  Price difference – As we can take the previous point in which
switching costs for direct substitutes will not be very high for
consumers, this makes the threat of substitutes high.
3. Customer Power : Low
 Few alternatives – Customers can ask for multiple products
which can increase customer power, but due to few
alternatives retailers offer a wide range of same product and
this will negate of weaken the overall customer power.
4. Supplier Power : High
 As written in case study that the problem of not being able
to use Samyan as a distribution centre for units with
Daewoo microwaves was solved by using the four regional
warehouses also when Samyan was charging $100 each for
microwaves then at that time Daewoo agreed for $83 each
so, MicroFridge has few alternative suppliers and can switch
to different suppliers any time without any such loss in costs
of business.
5. Competitive Rivalry : ?
 As of now there is no competitor because of patent
protection. There may come some competitor by
introducing new better products in the market or wait until
the patent expires.
 SWOT Analysis

Strengths:

 Leading presence across country. It comes in world’s premium

and well known brands and is developing in every field. The
industry also has worldwide suppliers which are deliberately
chosen on the basis of quality and price.
 The industry is steadily expanding its business, which results in
increasing in customers, and also investing in research and
development and high focus on innovation.

Weakness:

 MicroFridge has a leading brand image due to which its products

are of high priced, this may lead inversely towards the industry
when any new entrant will come with low pricing.

Opportunities:

 MicroFridge can own manufactured equipment and resources as

when the profit increases and it indulges its profits in
manufacturing on its own.
 There are different regions where it can expand its products in the
emerging market.
Threats:

 Increased marketing from competitors which can affect sales

negatively. Increased marketing from competitors lead to increase
in competition which can also lead to increase in cost of business
doing for the industry if they bring innovative processes of
marketing the existing product or bring new products into the
market.
 Recommendations

Based on overall analysis done for MicroFridge, this section will offer
recommendations for future benefits of the industry that will enhance
its competencies and capabilities, as well as reduce its risks and threats.