Business Research Method Research ProposalBargaining Power

Question: Discuss about theBusiness Research Method Research Proposal forBargaining Power. Answer: Introduction: Porters Five Forces The analysis of the Porters Five Forces is essential as it would help in analyzing the factors that may limit the profitability of the tyre industry (E. Dobbs 2014). The two factors are discussed with respect to the tyre industry- Mobile Tyre Shop. Bargaining Power of Supplier The bargaining power of the suppliers, primarily revolves around the current demands of the tyre industry. It is concerned with the supply of rubber and other petrochemical materials such as nylon tyre cord, carbon black. The cost of acquiring the petrochemical based materials is quite high and fluctuates frequently (Lei et al. 2016). The bargaining power of the suppliers is relatively high for this industry. The number of the suppliers is low and the availability of the raw materials is also low. This makes the company to face a difficult time in allocating the raw materials required for this industry. The low supply of the raw materials or the low quality of one supplier may force the clients to change their suppliers frequently. There are high switching costs associated with the tyre industry (Powell 2014). This involves a lot of time, effort and resources for the particular company. There is a high threat of forward integration. It is a business strategy that is concerned with th e expansion in order to control the direct supply of a companys product (Powell 2014). This may hinder the profit making motives of the companies as there would be a subsequent decrease in the companys production and an increase in the price of the raw materials. The main raw material required for the tyre industry is natural rubber (Kohjiya and Ikeda 2014). The tyre companies usually get credit from international markets for the purchase of rubber, which is being offered at London Inter Bank Offered Rate. The prices of rubber are witnessing a decline in prices, which tends to support the tyre manufacturing firms for a medium term. However, the primary dependence of the tyre industry is Natural Rubber, which has limited production in Australia (Kohjiya and Ikeda 2014). This makes the country to depend on international suppliers, especially from countries such as Indonesia, Vietnam and Thailand. Thailand is accredited to the worlds largest producer of natural rubber, which makes the Australian companies to depend on them (Kohjiya and Ikeda 2014). There is the high cost of acquiring raw materials for the manufacture of tyre, which decreases the profitability of tyre producing firm. The people responsible for fitting of the tyres has low bargaining power due to the knowledge of the people. The supplier must possess high bargaining power. He should possess good negotiation skills as he would be dealing with the purchase of bulk tyres at the best price. He must possess several connections regarding the supply of the raw materials. The suppliers with the equipments in the van possess medium bargaining power as he has several alternatives. This is due to the fact that he would be moving from one place to another and hence must demonstrate medium bargaining power. Threats of Substitute Products The tyre industry is facing stiff competition from the retreading sectors from all around the world. There is a cheaper option present in the retreading sectors that reduces the cost of the original tyres by around 24% (Pedram et al. 2016). The retreading can be defined as a re-manufacturing process for tyres which replaces the tread present on the worn tyres. The original material is preserved and there is low material cost involved compared to the manufacturing of a new tyre (Pedram et al. 2016). The lack of availability of the raw materials is low in the domestic sectors, which increases their overall cost. This makes the tyre companies to depend on the overseas markets for the supply of the raw materials. There is a high availability for the closest substitutes such as synthetic rubber, latex, guayule and others (Snoeck et al. 2015). This poses a high threat to the tyre manufacturing firms that rely solely on the use of natural rubber. The alternate products often come with low price and demonstrate better performance (Snoeck et al. 2015). The tyre manufacturing firms also face the threat from the non-branded product substitutes. The substitute products are available at a competitive rate and there is almost similar profitability of the firm. The threat of substitute affects the competitive framework of the firms. The substitute products may threat the profitability of the firm as the consumers may opt for the substitute products and discontinue purchasing the original products. The tyre making companies need to analyze the probability of the other products that can act as a substitute for their own products. The likeliness of the consumers to switch, cost of switching, trade-offs and others should be estimated well by the companies. This may pose serious threat to the company and there may be a subsequent decrease in the profitability. The Porters five forces are an excellent tool for understanding the level of competition within the industry and the subsequent business strategy that should be adopted. The bargaining power of the suppliers and the threat of substitute products are essential for predicting the amount of revenues for the company. References E Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), pp.32-45. Kohjiya, S. and Ikeda, Y. eds., 2014.Chemistry, manufacture and applications of natural rubber. Elsevier. Lei, W., Zhou, X., Russell, T.P., Hua, K.C., Yang, X., Qiao, H., Wang, W., Li, F., Wang, R. and Zhang, L., 2016. High performance bio-based elastomers: energy efficient and sustainable materials for tires.Journal of Materials Chemistry A,4(34), pp.13058-13062. Pedram, A., Yusoff, N.B., Udoncy, O.E., Mahat, A.B., Pedram, P. and Babalola, A., 2016. Integrated forward and reverse supply chain: A tire case study.Waste Management. Powell, K.S., 2014. Profitability and speed of foreign market entry.Management International Review,54(1), pp.31-45. Snoeck, D., Chapuset, T., Garca, J.G., Sfeir, N. and Palu, S., 2015. Feasibility of a guayule commodity chain in the Mediterranean region.Industrial Crops and Products,75, pp.159-164.