Global and Products Industry Porter’s Six Forces Analysis

Porter’s six forces analysis of the global paper industry would involve certain factors such as threat of new entrants, rivalry among existing firms, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers and relative power of other stakeholders. The explanations of the factors are given below:Threat of New EntrantsEconomies of scaleThe Gross Domestic Product (GDP) of the global paper industry has increased simultaneously with the growing usage of the paper by its consumers. In certain cases, the usage of papers remains intact where the GDP growth is witnessed to be almost stagnant. The global paper industry produces paper products of $750 billion each year comprising small enterprises globally (Scheihing, 2005).Product Differentiation Product differentiation is one of the most challenging measures of expanding or intensifying a business or industry. With the intense use of internet, the usage of paper is however decreasing day by day and as a result the global paper industry is trying to diversify or differentiate their products and trying to expand their product lines, especially based on the quality aspect (Scheihing, 2005).Capital Requirement A new entrant to the paper industry initially requires around $4.5 Million capital which may be recognized as a demanding level to position themselves in the industry (Scheihing, 2005). Switching CostThe switching cost for the paper industry is low. Therefore, the scope of new entrants is high, as new entrants can any time switch over to another industry if they do not feel competitive in the paper industry incurring minimum cost (Uronen, 2010). … Capital Requirement A new entrant to the paper industry initially requires around $4.5 Million capital which may be recognized as a demanding level to position themselves in the industry (Scheihing, 2005). Switching Cost The switching cost for the paper industry is low. Therefore, the scope of new entrants is high, as new entrants can any time switch over to another industry if they do not feel competitive in the paper industry incurring minimum cost (Uronen, 2010). Accesses to Distribution Channels The distribution channel of the paper industry comprises of various, dealers, shareholders, retailors, and consumers to serve the ultimate customers in the corporate and educational sectors. Notably, these better facilities to an industry encourage the new entrants to enter the existing market (Uronen, 2010). Cost Disadvantages Independent of Size Due to the high installation cost, and high maintenance cost, the probability of new entrants reduces. However, due to the independence of determining the size of the firms the scope of new entrants rises depicting a moderate level of threat to new entrants (Uronen, 2010). Government In relation to the global paper industry, the government has implemented certain rules and norms, laws, and regulations. In addition, there are many associations who are protesting against paper industry due to the usage of forest products and deforestations (Uronen, 2010). Rivalry among Existing Firms Number of Competitors There are too many paper mills or companies existing within the global paper industry, but the top five existing competitors are Paper Associates PTY.LTD, International Paper Company, Kimberly-Clark de Mexico, Georgia-Pacific LLC and Svenska Cellulosa Aktiebolaget SCA among others (SKC, 2012). Rate of Industry Growth