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3 Five Forces Model Case Solution & Answer

3 Five Forces Model Case Solution

3.1 Risk of Entry by Potential Competitors

The risk of new entrants by potential customers is high because the arrival of entrants can introduce higher level of competition in the market and enhanced innovation, new ideas of providing services and low priced strategies can be predicted. The strength of the competitors is high because Plug Power will have to bear the high risk and it needs to maintain its competitive edge in the market to take this as an opportunity for itself. Plug Power is one of the prominent companies in the USA. The new entrants can bring upward pressure to the industry. Moreover, the industry can be profitable because of the new entrants and higher revenues can be generated,as it is an electronic industry, which provides technological services to various businesses.

How plug power can take the opportunity

It can build the economies of scale and take the opportunity of cost effectiveness. It can also make new products and services, which would build the customers’ mind to buy from the Plug power Inc.

3.2 Rivalry among Established Companies

There is a high competition in the industry by the rival companies and the force is strong because of innovative ideas by the rivals. Plug Power Inc. operates in the electronic industry where the strength of the competitors can bring higher profit to the industry. As the company grows, so does the industry. There is an upward pressure to the industry for revenue generation. The competition creates perfection in the services and goods. Every company would try to give their best services, which could-grow the industry and expand its worth.

 How plug power can take the opportunity

Plug Power Inc. can take this as an opportunity for creating products’ differentiation and economies of scale. It can collaborate with its rivals and can increase its market capitalization in the electronic industry.

3.3 Bargaining Power of Buyers

As the Plug Power Inc. is the electronica firm, which provides technological business ideas to its customers. The main buyers of the company are NASA, Amazon, BMW, ABENGOA and MULAG.  There is a high bargaining power force because buyers always demand the best quality in the minimum price. This creates a decline in the company’s profitability and causes loss incurrences to the  industry because of less revenue generation. These forces create  downward profitability to the industry. Plug Power Inc. faces the demands of higher discounts from its buyers, which can be a threat for the company.

How plug power can take the opportunity

It can build a base for the buyers so it will be helpful to tackle the force. This can decrease the bargaining pressure and creates an opportunity for the company to enhance its production and efficiency in sales. Moreover, the company should produce new products so that the buyers would not be able to take discount on it, because of the innovation and advancement in the technology.

3.4 Bargaining Power of Suppliers

Suppliers in the electronical industry have the higher rate of bargaining, because there is high competition in the market with a presence of numerous suppliers. The bargaining chip is mostly because of a diversified electronical industry and the tough rivalry has caused the bargaining strength of the suppliers, which has created lower margins in profitability and the industry has gone downward sin terms of revenue generation………………….

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