Porter's five forces are a familiar method of analyzing business competition that companies usually use. It divides five forces from industrial organization economics to determine the intensity of competition. The five type of forces include in the porter’s five forces is threat of substitute products, bargaining power or customers, threat of new entrants, bargaining power of supplier, and last was competitive rivalry among existing firms.
First, let’s apply the substitute of
products on the Aravind. As we know that Aravind is almost an authority agency
in the Ophthalmology community. There
are very few organizations or entrepreneurs that can threaten Aravind's
position in the ophthalmology field. It means that the threat of substitute
products to Aravind is substantially low especially in India. Another reason,
Aravind is always taking care of forming a good reputation and image, and the
price is low, but the quality is still good and most of the customers will give
more trust to Aravind other than choose another company. This has caused
obstacles that block the substitute product and services to engage in the
ophthalmology area.
For the threat of new entrants is
almost the same situation with the substitute of products. Because of Aravind's
good reputation and assurance. This has caused the Aravind to be very stable
and almost acquire most of the ophthalmology market in India. There is a high barrier in the India
market, if there is still another threat of new entrants, it will be more
possible from the other developing country.
Besides that, the bargaining power of the supplier is constantly more flexible based
on management and change. If the suppliers of Aravind was more, the
bargaining power of supplier to the Aravind is low, if the suppliers of Aravind
was less or one, the bargaining power of suppliers to the Aravind is higher
because of the dependency on only one supplier. However, the technology was
improving daily and the product differentiation also increased. This will
slowly increase the bargaining power of the supplier because of the unique
product, especially to the Aravind eye hospital is the specialty for
ophthalmology that needs special medical equipment.
Another was the bargaining power of
the customers. Aravind eye hospital
provides a better service and product to the customer at an affordable price
for a very long time. This shall be able to attract the customer, but it also
set up a benchmark and fixed customer thinking with the quality of the Aravind.
This has caused the bargaining power of the customer to increase. However,
there is not much hospital that can replace Aravind eye hospital in the
community of ophthalmology because Aravind eye hospital price and quality are
higher than normal hospital standards, and especially in India, there is almost
no other competitor. It means that there is less choice for the customer when
they want to solve the cataract problem so that the bargaining power of the
customer will decrease accordingly.
As a conclusion, there was less
competitor for Aravind in the ophthalmology field because of its own good
services. And it was a high barrier in the market, which means that there is
also low threat from new business in India and there will be higher loyalty
customers as there is less choice in the India market. This has also cause that
bargaining power of the customer and supplier relatively low accordingly.
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