200 words a Consider the following quote based on the firm R

200 words

(a) Consider the following quote based on the firm Rubbermaid. Rubbermaid has experienced major increases in the cost of resin (an important raw material... ) and attempted to pass on these costs with large price increases to its customers. Wal-Mart was particularly angered by the large price increases... Wal-Mart refused to stock a number of Rubbermaid products and deleted Rubbermaid\'s products from its promotional materials... Instead, Wal-Mart featured Sterilite, one of Rubbermaid\'s prominent new competitors... When Rubbermaid passed on the huge price increases to its customers, the competitors had only small price increases, deciding instead to reduce their profits rather than pass on the full cost of the raw materials.

The quote illustrates three of Porter\'s five forces. Which three? How does it illustrate each of them?

Solution

Answer:

Three of Porter\'s 5 forces are as follows-

Industry Revelry - It shows that there is high industry rivalry among the competitors because when Rubbermaid increased its prices , rest of the players increased their prices by very less margin to gain the market share.

Bargaining power of Supplier - Here the bargaining power of suppliers are lesser because the number of suppliers are high. Wal-Mart has the power over the suppliers like Rubbermaid and Sterilite. Wal-Mart can decide whether to keep a particular supplier\'s goods in its store or not.

Bargaining power of Customers-Bargaining power of middleman (Wal-Mart) and final customers is high because the product are close substitute to each other and customers are price sensitive.