Porter's Hardware and Construction

Porter’s Five Forces        

In order to understand the competitive forces that Robertson Enterprises is facing we used the Porter’s Five Forces, developed by Michael E. Porter in 1979, which includes the threat of substitute products, threat of new entrants into the industry, bargaining power of buyers, bargaining power of suppliers, and industry rivalry and competition.

• Threat of Substitutes

The threat of substitutes in a hardware and construction supply retail industry is high because most products, especially building materials are standardized and undifferentiated. Therefore, customers would find it relatively easier to switch suppliers without significant impact to their pocket or the quality of merchandise purchased.

• Threat of New Entrants

The threat of new entrants to this kind of industry is low, particularly because starting a hardware and construction supply retail business requires high capital. Moreover, new businesses may find it hard to establish a name because Robertson Enterprises have built a good presence and reputation in the Municipality of Manticao since they have been there for 10 years already and especially because of their projects together with the Local Government Unit.

• Bargaining Power of Buyers

Due to high competition, the bargaining power of customers is very high. As a result, retailers tend to compete based on their customer service relationship. Because we have this “Suki” relationship between buyers and sellers in the Philippines, Robertson Enterprises offers discounts to those customers who always choose to purchase in their store in order to maintain their loyalty. In addition, Robertson Enterprises’ store location is at their advantage because it is located along the national highway of Manticao which buyers can easily locate.

• Bargaining Power of Suppliers

The bargaining power of suppliers in this kind of industry is moderately high since cost of hardware and construction supplies tend to increase annually. Therefore, Robertson Enterprises need to build a good supplier relationship with their suppliers in order to get the best prices and the best quality of products.

• Rivalry among Competing Firms

The hardware and construction supply retail industry is highly fragmented regarding both products and services, therefore, the degree of competition in this kind of industry is very high.

        As a conclusion, because hardware and construction supply retail industry is very competitive, Robertson Enterprises must focus on putting emphasis on their competitive advantage. For example, because they are into projects with the Local Government Unit they can also extend their partnership to private institutions that have projects in the Municipality of Manticao in order to add value to their reputation and build good customer relationship with these firms.