Describe Porter’s five basic elements that are critical in shaping a market stru

Question

Describe Porter’s five basic elements that are critical in shaping a market structure. Suppose you are a CEO of a start-up company that wants to market a cutting-edge genetically engineered product. This product has been clinically tested and has temporary FDA (Federal Drug Administration) approval. Your competition includes large and already known companies such as Genentech; Johnson and Johnson etc. Can you point out a few strategies/tools that you may apply (using Porter’s guideline) to market your product? Be sure to include some of the key components of Ethical practices that you would like to see this Start-up company follows.

Explanation / Answer

Answer : Porter's five basic elements in shaping a market structure are following;

(i) Competition with existed competitor : There are many competitors in the market for a start up company. In that case company should play some strategies to compete with existed companies.

(ii) Customer's bargaining power : Customers has bargaining power. For a start up company it is most important to re-shape the market structure. Because customers always try to bargain in that situation if customers are unsatisfied then they will move to competitors.

(iii) Bargaining power of suppliers : Suppliers has more bargaining power. Specially when there are less suppliers in the market. In that case suppliers can increase the price level for raw materials.

(iv) Substitute product's threat : A new company can capture the market structure by producing substitute products and by reveal these products as the cheap products with quality than others in the market.

(v) New entrants' threat : If a company has good capture in the market and company has good knowledge about the market then new company can not attract their customers and suppliers and vise versa.

As CEO of a start up company I will use some strategies to compete with already existed and known companies. First of all I will research the known companies' products, price level, supplier chain and covered market structure. After research I will produce a substitute product at the cheapest rate with higher quality than other companies. Then to attract customers I will give the chance of bargaining to customers. To attract suppliers I will provide a good price rate for supply of raw materials. Thus I will capture the market and compete with known companies. If I can capture the market at first then after sometimes my company can earn lots of profit by increase the price level.

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