Why are Porter's Five Forces important, and how do they practically apply to Maliban's situation?

Why are Porter's Five Forces important, and how do they practically apply to Maliban's situation?

Porter's Five Forces is a simple strategic management framework that helps analyze a firm's competitive scenario. The challenge for students is understanding how each "force" impacts real business decisions and not just quoting the model. Applied to Maliban, all the forces become extremely relevant.

For instance, threat of new entrants' intensity is high in the Sri Lankan biscuit market because of fairly low entry barriers. Diana and Munchee are a couple of the brands that have entered and competed with Maliban, forcing the firm to keep innovating. The power of suppliers is also an issue with Maliban because it relies on raw materials such as wheat, and uncertainty in supply or price may impact manufacture.

Customer power is also high, Sri Lankan consumers are price-sensitive and taste-driven. Should Maliban fail to match taste trends or fail to provide value for money, customers can readily switch to substitutes. Substitute products like local snacks and bakery products pose a threat to Maliban's customer base. Lastly, competitive rivalry with competitors like Munchee is high. The two companies copy each other's offerings, and this compels Maliban to retain brand loyalty through innovation, CSR, and promotions.

Understanding how these forces influence Maliban's strategy allows students to see how theory is used to inform real-world business choices.

 

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