DEVELOP AN ESSAYAnalysis of the influence of modified Porters five forces on sericulture industry attractiveness for an entrepreneurship in KenyaTimothy Mutugi MurithiR1806D5436536Induction module: UU-DOC-IND100-ZMFlorentia AntoniouDate:1/6/2019Modified Porters Five Forces is a model that identifies and analyzes five competitive forces that shape every industry, and helps determine an industry’s competitiveness and attractiveness (Porters, 2008). The forces include; Complementary products, entrant threat, product substitution threat, bargaining power of suppliers and buyers. This model will be applied to understand and analyzing the interaction of existing sericulture industry in the long-term attractiveness, profitability margin and decision to enter an industry or not.
Mac, M.(2018).Around 2640BC in china, silk and culture of keeping silkworms originated, therefore, the word Su and Si was derived meaning sericulture in Chinese. It’s defined as rearing of silkworm and traditional practices involved in the process (Chouhan and Mudasir, 2015). The study will make use of application of modified porter’s five forces on sericulture industry attractiveness for entrepreneurs in Kenya.
Michael E.D. (2014) applied Porters five forces on organization performance included; new entrants threat, substitute’s threat, buyer’s power, suppliers power and competition rivalry. The author excluded compliment which is the sixth force, the study use sophisticated tool and strategic insights for forthcoming analysis as it was predicated by Michael possible modifications and extensions of the forces. The following hypothesis will be tested; the competitive rivalry, the complement, entrant threat, substitution of product threat, customer bargaining power and supplier bargaining power has no significant influence on attractiveness of the sericulture industry in Kenya (Timothy, 2018).Attractiveness will have two broad areas mainly organizational and individual attractiveness, under organizational the followings shall be examined; level of internationalization, referred as disperse of organization divisions across various countries; Pay mix includes pay policies which permit organizations to differentiate from competitors; level of centralization defined as decision making at a higher level of an organization and size of the organization(Lievens, Decaesteker, Coetsier and Geimaert, 2001). Organizational characteristics which attributes to beliefs will be considered too, for example: employer information comprised of size, geographicl dispersion and environmental concern; job information including pay levels and opportunities for advancement; people information like attributes of potential co-workers, education level and supervisors (Paul, Emem & Anietie, 2015).Sericulture Industry in Kenya has been said to be dormant for many years yet it has potential of creating new enterprises and promoting upcoming startups (Mburu, A., Kirsoyo, A., Kinyanjui, J., & Waithaka. (2013); However, there is high returns and commodity diversity attractiveness; the theory application shall be adopted to evaluate the attractiveness of the sericulture industry. In the year 1979 Michael Porters developed the model and a sixth force model was included in the mid 1990s referring to complementary products. According to Porters, (2008) the sixth forces model is a strategic enterprise tool that helps ventures evaluate the competitiveness and attractiveness.Bargaining power of buyer is the strength of the customer and buyers to cause a slight change of commodities price in the market. This is possible due to the following drives; the number of customers in the market; size of each order; differences between competitors; price sensitivity; important of each buyer to the organization; ability to substitute; and switching costs of buyer from one supplier to another. All the drives increase the bargaining power of customers, but reduction of power is possible through: Increment of switching cost to another supplier, few suppliers, segmentation of fragmented customer, inadequate of substitute products, and low threat of backward integration.Tanakorn et al. (2013) The buyer’s pressure forces the market players to do improvement and reduction of product prices. Another study was conducted by (Njambi, et.al 2017) used chi-square tests, correlation and multiple regressions to measure bargaining power of buyers against competitive advantage. The chi-square tests indicated 12.046 at 2df. Since this P-value was than 0.05, concluded that there was no statistically significant association between the two variables, therefore, the null hypothesis was rejected.Suppliers bargaining power is the capability of causing changes of inputs. A number of factors influence changes; number of suppliers in the market; size of the suppliers; uniqueness of service or product; supplier advantages; and costs switch. The following factors can limit power of suppliers; cheaper substitutes cost; absenteeism switching cost; limited forward integration threat, and a less necessity for the suppliers’ product in the organizations final product.Sharif (2014) applied modified porters five forces model in assessing attractiveness of industry. He found that substitute suppliers scored a mean of 4.24, supplier concentration 3.73, impact of supplier on cost 3.97, supplier difference 3.48 and volume of business to the supplier mean of 3.97. The sturdy further revealed that supplier’s power is on average in determining attractiveness.Threat of new entrants is the situation prevailing in the market at a given time when the existing firms are making abnormal profit which makes an easier path for the new competitors to enter the market. Once the new players enter the market the profitability margin reduces gradually. The existing players can use strong and durable obstacles to entry like patents, economies of scale, high product uniqueness, required capital, government policies, and establishment cost of distribution channels; Hence, a decline of profit margin at a competitive rate resulting to unattractive industry.According to Tanakorn and Sittha (2013) found that the product differentiation had an effectiveness score of 0.25, possibility score of 3.50 and weighted score of 0.88. Capital had an effectiveness score of 0.75, possibility score of 4.08 and weighted score of 3.06.Murat, A., Ozqe, C., Melike M., (2017). Conducted a study on the sources of competitiveness of the US states; found that cluster attractiveness had a higher impact compared to environmental, ownership, educational and talent attractiveness.ReferencesChouhan et al. (2015). Analysis situation of sericulture industry in Jammu and Kashmir. 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