Panasonic Five Forces Analysis

Panasonic Five Forces Analysis

Panasonic is a well known global company of consumer electronics. However, apart from consumer electronics, the brand also deals in housing appliances, automotives parts and B2B.  The brand is in a financially strong position and also makes large investment in R&D. Its growth in the Asian countries has been impressive.  The Japanese company has a large and strong product portfolio. However, there are several factors in the international environment that affect a brand’s competitive ability and growth. Michael E Porter’s five forces model can be used to understand the forces that affect the competitive position of a brand and its attractiveness. These forces are a part of every industry and market. Porter’s five forces is a useful tool for managers to understand how much potential for growth the market conditions offer and what factors can affect the competitive position of a brand. This is a five forces analysis of Panasonic.

KEY POINTS:

  • Bargaining power of suppliers: Low
  • Bargaining power of buyers: High
  • Threat from substitutes: Moderate
  • Threat from new entrants: low
  • Intensity of competitive Rivalry: High

Bargaining power of suppliers:

The suppliers of Panasonic are located all over the world. Globally, it has established trustful relationships with its suppliers to form partnerships that are based on customer values and social responsibility. The bargaining power of the suppliers remains low because of their small size and low financial clout. These suppliers are required to follow the rules set by Panasonic and comply with laws and regulations as well supply raw material in a socially responsible and sustainable manner.  Panasonic sets the rules related to CSR and information sharing which the suppliers are required to follow. The brand can easily shift to new suppliers in case an existing one does not make the mark in terms of quality or the rules of supply chain. In this way, while Panasonic gets the upper hand, the suppliers hold very low bargaining power.

Bargaining power of buyers:

The bargaining power of the customers has grown in the 21st century. It is because while the 21st century customer is well informed, he makes his buying decisions after conscious evaluation. Increasing competition has also added to the bargaining power of the customers who want better quality products at affordable prices. The quality and innovative technology of Panasonic are a source of competitive advantage but rival brands also offer matching quality. Since there are more brands fighting for customer share, it gives the customers extra bargaining power. Moreover, Panasonic is less aggressive in terms of marketing. The overall, bargaining power of the customers remains high.

Threat from substitute products:

The threat from substitute products is moderate. It is because there are a very large number of consumer electronics brands selling similar products. To moderate the threat, Panasonic has diversified into new areas. However, consumer electronics sale is the biggest source of revenue for the brand and due to the large number of CE brands in the market substitute products are also available in plenty. The only factors moderating this threat are brand image, quality and level of innovation and diversification. The overall threat from substitute products remains moderate.

Threat from new entrants:

While smaller brands can enter the CE market with fewer products, to challenge the position of well established brands like Panasonic is difficult. To compete with the bigger brands like Panasonic any new brand would need to make significant investments into product quality, large firm infrastructure, marketing, R&D as well as skilled human resource professionals. There are other legal and economic barriers too making entry into the CE market difficult.  Creating a brand image that can compete with the existing brands is also difficult. All these factors minimize the threat from any new entrant. The overall threat remains very low.

Competitive Rivalry among the existing brands:

Competitive rivalry among the existing brands is intense. A large number of brands from Samsung to LG and SONY are competing for market share in the consumer electronics market. Most of these brands are highly aggressive about marketing their products and brand. Panasonic is not so aggressive about marketing but invests heavily in Research and Development. It competes on basis of quality and innovative technology. Apart from that, the brand image of Panasonic is also a source of competitive advantage for the brand. However, most of its major competitors are strong brands with global market presence and great brand image. All these factors add to the intensity of competition. The overall competitive rivalry among the competing brand remains high.

Abhijeet Pratap

I have studied Marketing and English Literature and like to write on topics in Business management, Marketing, literature, latest technologies and other areas. I also like to spend my time learning coding.