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External Analysis Research Paper

Essay by   •  November 19, 2015  •  Research Paper  •  1,099 Words (5 Pages)  •  1,337 Views

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II. External Analysis

1. 5 competitive forces

a. Competition = MODERATE

1. GlaxoSmithKline Philippines (Celine)

2. Unilab (Enervon)

3. Pfizer (Centrum)

4. Intermed Marketing Phils. (PEDCEE; Memorx)

Competition is given a “Moderate” rating due to two offsetting reasons. The first reason which gives the competition force a strong rating is the fact that there is the existence of well-established manufacturer brands such as GSK Philippines, Unilab Philippines, Pfizer and Intermed Marketing Philippines which offer similar products such as vitamins and food supplements. Taking this into consideration, the similarity in products and the corresponding qualities/benefits may lead to a cut-throat competition that is a price war thus yielding a strong force. However, there are only a handful of manufacturing companies that offer the said products which may result to each company acquiring a substantial market share and thus offsetting the strong rating resulting to a “Moderate” rating.

b. Supplier bargaining Power = MODERATE

c. Buyer bargaining Power = STRONG

5. low switching cost

6. several other recognizable brands to go to

Buyer bargaining power is given a Strong rating because the switching cost to other vitamins/supplements offered by other manufacturers is relatively lower as compared to other products in different industries. Moreover, the other recognizable companies with strong brand equity combined with the low switching cost prove to be a force that concerns Bewell Nutraceuticals. Potential buyers may choose to buy the products of Glaxosmithkline or Unilab in the event that they are not satisfied with the effects of Bewell’s products. Finally, buyers also constitute a huge portion of Bewell’s gross profit margin thereby having buyer bargaining power as a strong force to Bewell. Furthermore, a good number of the Philippine population is also price sensitive in which they would choose the cheaper offered product when the benefits are similar.

d. Substitute = STRONG

7. Natural fruits

8. Healthy food

The rating for Substitute was given a strong since Natural fruits and meat, despite the said products being relatively costly, is still preferred over artificial food supplements. This fact poses a threat to Bewell’s products since natural fruits that contain the same benefits which are offered by Bewell’s products are available almost everywhere from wet markets to supermarkets. The aforementioned fact coupled with the Philippine populations’ price sensitivity equates to a strong force for the substitute element.

e. Potential new entrants = MODERATE

9. Brand building is difficult

10. Cost to entry requires significant capital

The threat of potential new entrants acquired a rating of moderate due to three reasons. First is that building or establishing a brand that is trusted and recognized by the nutraceutical market in the Philippines proves to be quite difficult as it requires aggressive marketing to convince the market of the company’s expertise in the said field. Second is the cost to entry is quite high because it would require a substantial amount of capital from the proprietor to establish the manufacturing and distributing of a branded drug or supplement. Considering the fact that there are only a handful of major local competitors in this industry, the cost to entry as well as brand building make up for the low number of local competitors. Nevertheless, it is still important to note that the Philippine nutraceutical market is still growing and profitable opportunities attract new entrants thus yielding a rating of moderate.

2. Driving forces

a. Change in lifestyle

Despite the dominance of fast food restaurants and other products that do not offer health benefits, the current Philippine population is developing towards

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