Market Forces and Strategy

The determination of a strategy is rooted in determining how a company stacks up against basic market forces, how it can defend itself against these forces and how it can influence these forces. Fortunately, Michael E. Porter in his article How Competitive Forces Shape Strategy defined these market forces for us. Known as Porter’s 5 forces they consist of:

1) The industry – this is jockeying for position among current competitors, this can consists of price competition, new product introduction or advertising slugfests. 2) The threat of new entrants - seriousness of threat of entry depends on barriers to entry and reaction from existing companies. There are 6 major barriers to entry: 1) economies of scale 2) product differentiation 3) capital requirements 4) cost disadvantages independent of size 5) access to distribution channels 6) government policy. A new company will generally have second thoughts about entering an industry if incumbent has substantial resources to fight back, incumbent seems likely to cut prices or industry growth is slow. 3) The threat of substitute products/services - substitutes can place a ceiling on prices that are charged and limit potential of an industry. 4) The bargaining power of suppliers - suppliers can squeeze profitability by increasing prices or lowering quality of goods. 5) The bargaining power of buyers (customers) - customers can force down prices, demand better quality, more service or play competitors off on each other.

Once you assess how market forces are affecting competition in your industry and their underlying causes, you can identify underlying strength and weaknesses of your company, determine where it stands against each force and then determine a plan of action. Plans of action may include:

• Positioning company – match your strengths and weaknesses to company’s industry, build defenses against competitive forces or find a position in industry where forces are weakest. You need to know your company’s capabilities and causes of competitive forces • Influencing balance – take offensive, for example innovative marketing can raise brand identification or differentiate product. • Exploiting industry change – an evolution of an industry can bring changes in competition. For example, in an industry life-cycle growth rates change and/or product differentiation declines; anticipate shifts in factors underlying these forces and respond to them.

The framework for analyzing industry and developing a strategy provides road map for answering question “what is potential of this business?”

Reconciling Business Model and Strategy

I will use a short example to illustrate difference between a business model and strategy. Although you may think that Wal-Mart pioneered a new business model on its road to success, reality is that model was really no different than one Kmart was using at time. But it was what Sam Walton chose to do differently than Kmart, such as focusing on small towns as opposed to large cities and everyday low prices, that was real reason for his success. Although Sam Walton’s model was same as Kmart's, his unique strategy made him a success.

Amongst HEC, I personally find Cellosize of Dow as most stable product compared to Bermocoll & Tylose.

Myself as Paint formulator & other colleagues working in different companies had a dilemma existing for selection. For cheaper Paints Stronger product or High Viscosity grades were used such but there always was a flocculation after some period on shelf storage. For Expensive ones we had to prefer Medium Viscosities grade to overcome shelf storage time. Most of companies carry same practice.

When I came across Solvitex range of Thickeners I was given much competitive prices. Priced at least 10% lower than HEC based Products, but my major concern was to check colloidal stabilization. The Product was immediately tested and was found to perform excellent.

Apart from that, Solvitex has provided better color acceptance & and coatabilty.

Sooner we came across Solvizen developed by same company for more economic & cheaper Price. The thickening & stability properties was same but economically priced.

However, The Water solution clarity of Solvizen was not as clear as of Solvitex or HECs. It was slight turbid. But when incorporated in Paints, we couldn’t find any difference. Again Paint was stable physically observed.

As a Paint formulator from past 2 decades and based on my experiences, I suggest to all those technicians in same field to try Solvitex & Solvizen range of Thickening agents.

For more information about solviex & solvizen one can check http://www.asiantradelinkindia.com/additives_for_paints_adhesives_paint_binders.html

Mr. R. S. Subramanium is working with Noble Paints Mfg. Co. and has more than 20 years experience in the paints industry. He can be contacted at asiantradelinkindia@yahoo.com or at Phone No.: 91-22-25007236 / 25000659