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TRI SEM-III PGDM (FS)

MANAGEMENT INFORMATION SYSTEM
PROJECT ON
PORTER five force MODEL analysis
OF
SUBMITTED TO
PROF. SANCHITA GHATAK

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ACKNOWLEDGEMENT

Every project big or small is successful largely due to the effort of a number of
wonderful people who have always given their valuable advice or lent a helping
hand. We sincerely appreciate the inspiration; support and guidance of all those
people who have been instrumental in making this project a success.
We, the students of Jaipuria Institute of Management, Lucknow (PGDM-FS),
are extremely grateful to our project guide for the confidence bestowed in us
and entrusting our project entitled With respect to Porters Five Force Model
analyze an Indian e-retailing site. All factors to be considered should be in
Indian context.
At this juncture we feel deeply honored in expressing our gratitude to our
Project Guide, Prof. Sanchita Ghatak, for assisting us in compiling the project
and providing valuable insights leading to the successful completion of the
project.
Last but not the least we place a deep sense of gratitude to our family
members, friends and well wishers who have been constant source of inspiration
during the preparation of this project work and who has always supported us
morally.







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TABLE OF CONTENTS

1 INTRODUCTION ........................................................................................... 1
2 E-COMMERCE IN INDIA .................................. Error! Bookmark not defined.
3 COMPANY PROFILE ........................................ Error! Bookmark not defined.
3.1 FLIPKART .................................................. Error! Bookmark not defined.
3.2 FLIPKART LONG TERM OBJECTIVE ............ Error! Bookmark not defined.
3.3 GROWTH OF FLIPKART ........................................................................... 2
4 ANALYSIS OF PORTERS FIVE FORCE MODEL OF FLIPKART ............................ 3
4.1 BARGAINING POWER OF SUPPLIERS ...................................................... 4
4.2 BARGAINING POWER OF BUYERS .......................................................... 4
4.3 THREAT OF ENTRY ................................................................................. 5
4.4 THREAT OF SUBSTITUES ......................................................................... 5
4.5 INTENSITY OF RIVALRY ........................................................................... 6
5 CONCLUSION ............................................................................................... 7
6 RECOMMENDATIONS .................................................................................. 7







PORTERS FIVE FORCE MODEL ANALYSIS OF FLIPKART 1


1 INTRODUCTION

Flipkart aims to become the largest retailer of India. Flipkart wants to be present across all
categories, except in groceries and automobiles, the CEO said. Our target is not just those
who shop online. We want to highlight the convenience of e-commerce to traditional offline
shoppers and thus, help grow the market









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1.1 GROWTH OF FLIPKART


In FY2013, Flipkart had shown $45 million loss in their account books on revenue of $190
million a loss of 24% flat against revenue. The revenue soared by more than five folds in
FY2012 though, the loss percentage dipped to just half compared to FY2011. One can quote
it as a positive sign for the company but the calculation on FY12 losses in figures disappoints
outrageously. Flipkart, which is yet to smell its first profit dollar, has been banking upon huge
sum of investments brought in by the management for the last 6 years.
The company has pocketed $550 million from various investment groups, including the
largest round of funding that brought in $360 million to the company earlier this year. As per
the recent valuation by MIH an investor in the company Flipkart is worth $1.65 billion
and the companys belief in winner-takes-all strategy could result in a 20% increase in
valuation in the next one year.



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2 ANALYSIS OF PORTERS FIVE
FORCE MODEL OF FLIPKART

Objectives of Porters Model
External Influence
Competitive Strategy
Inside feel of Market
Analyzing market Mix.


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2.1 BARGAINING POWER OF SUPPLIERS

For suppliers, e-commerce is another platform to sell their products. Hence,
e-commerce companies have some amount of bargaining power.
Except in case of popular products, company has a lot of alternatives. They have
low switching cost if there is not any contract.
Not all suppliers might have the ability or willingness to forward integrate.
Price discrimination is possible.
As Flipkart is an inventory based business model, they buy in bulk from suppliers.
Treating suppliers as partners would be beneficial for the both sides.
Thus we can say that Bargaining Power of Suppliers is Low as there is large
supplier base and decreasing popularity of printed books.

2.2 BARGAINING POWER OF BUYERS

To attract buyers to new mode of purchase, various methods (eg. COD and Wallet
payment) are tried to make the process easier.
Buyers take times to trust the company.
Price information is easily available without direct interaction. Hence no price
discrimination is possible here.
As the customers are the end users of the product, there is no threat of backward
integration.
Large numbers of competitors are seeking for buyer attention. This might led
some to believe that bargaining power is in buyers hand. However, the market
size and other growth options make it a level playing field.
Products are not differentiated. Hence buyers can easily switch from one player to
another.
Thus we can say that Bargaining Power of Buyers is High as there is presence of
multiple players & traditional retail stores and cheap old/used book vendors.



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2.3 THREAT OF ENTRY

Industry condition: Very high potential but is at its nascent stage. Lot of scope for
growth.
Entry of many small players to explore the niche areas.
High capital investment required. It wouldnt be a deterrent as VC/PE are
interested in investing.
Flipkart have already established its brand name and network. Hence it might not
be affected by the entry of new small players in their domain.
Flipkart is ahead in their learning curve. Although other players are learning from
Flipkarts mistakes as well.
Thus we can say that Threat of New Entrants is Moderate as there is low capital
investment and high technological intensive players are there on same platform.

2.4 THREAT OF SUBSTITUES

Emergence of M-commerce which would make purchase process more
convenient.
Traditional retail stores which is trusted by customers (as they prefer transacting
in person) over the e-commerce companies.
There is no switching cost for the buyers to move from one company to the other.
For the similar thing the cross price elasticity is very high.
Thus we can say that Threat of Substitutes is Low as there are traditional book
stores and advent of E book readers like I Pad and Kindle.







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2.5 INTENSITY OF RIVALRY

Flipkart is not only competing against their competitors in e-commerce but also
against traditional retail stores.
Flipkart has less competitors of the same size but various in small sizes.
Incentive to fight is low as the market is big enough for everyone to grow.
High exit cost: As Flipkart has an inventory based business model; exit cost for it
is very high.
Thus we can say that Rivalry among Competitors is High as there are low entry
barriers and there is huge market.















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3 CONCLUSION

The Overall Brand Value of Flipkart is Good, but it is facing some tough competition from its
global competitors like Ebay and Amazon. But if talking about domestic market i.e., India, it
is the most superior E-business portal which is aggressively expanding & planting its roots
deep into the Indian market & at the same time shifting the mindset of the people i.e., from
going & shopping from physical store to online stores which is magnificent.
4 RECOMMENDATIONS

Short Term
Increasing margins while reducing losses by providing attractive bundled deals to low
value shoppers.
Provide small mobile outlets in cities with limited reach to internet and increasing
demand.
Long Term
Enter new international markets which are either un-served or untapped.
Focus on high margin products like e-novels for a book store.
Diversify into all product categories (achieved) to achieve economies of scale.
Educate Indian conventional customer by marketing efforts.
Increase bulk selling and reach to student customers by ties with educational institutes
for academic curriculum supplies.