Porter’s Five Forces

 Iran Advertising Company, IRAPCO, is an advertising agency whose mission is to offer a diverse assortment of quality advertisement services for its clients in marketing management through improvements made possible by research projects. The extensive executive networks that collaborate with IRAPCO will enable it tap into the opportunities that these collaborators have to offer. Using the simple yet powerful tool that is the porter’s five forces, IRAPCO will be able to comprehend the competitive power that it holds in the advertisement industry. The company will also be able to analyze its strengths in future ventures using porter’s five forces. The advantage of understanding IRAPCO’s competitive position is that the company will benefit from its strengths while providing an opportunity for strengthening its weaknesses. Analysis on the 5 forces will also help the company avoid making the wrong decisions. Below is a graphic representation of the analysis instrument of Porter’s 5 forces. 

            As the name Porter’s five forces implies, the ability of a business to compete is determined by the five forces. Supplier power is a force that is determined by the number of suppliers IRAPCO has and their influence on the company’s operations. Fewer supplier choices means that the suppliers have control over the company. If the suppliers supply unique products to the company then they have even a greater hold on the company since they can withhold the products or even hike prices at their whim. IRAPCO has few suppliers who supply unique products to them. Since Iran’s Ministry of Culture and Islamic Guidance ranks IRAPCO as number one among environmental media companies, the company has a hold on the suppliers since we are one of their biggest business providers. The company should however seek to establish its own supply chains by establishing or buying subsidiary companies in order to minimize the risk of suppliers acquiring a competitive advantage over IRAPCO.

            Although IRAPCO currently hold the top position in its sector, competition is high. Competitive rivalry is another force that influences the company’s influence and power in the industry. In Iran, there are currently 980 registered companies vying for the same market share as IRAPCO. By securing our own supply lines, we can be able to surpass the customer’s expectations by improving on service delivery. Bargaining power of buyers is another force that can influence the buyer’s power to reduce IRAPCO prices. The company is at an advantageous position when it comes to buyer’s bargaining power since Iran’s foreign policies have discouraged companies from advertising in Iran. Since no new companies can begin business, the buyers have to do with the available companies as their advertisement service providers. This foreign policy also diminishes one of the 5 forces which is the threat of a new competitor. This threat is also diminished because a lot of initial capital is required to start an advertising company. The bureaucracy set up by the Iranian Municipality regarding environmental media construction has also considerably trimmed down the number of investors ready to venture into the advertising business.

The threat of substitutes is the final force that may influence the company’s ability to compete in the market. If another can substitute IRAPCO’s product easily, IRAPCO’s power to compete in the market is weakened. IRAPCO can reduce this threat by a lengthy study into customer preferences and how to meet these preferences and by branding its products to make them unique. Using the analysis on Porter’s 5 forces, the company can be able to bolster its place in the Iranian Advertising industry.

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