porter's five forces model

1. Sitara Textile
Introduction:
Sitara Textiles is among the foremost enterprises of Pakistan. The group started with textile
processing in 1956 and progressively flourished into a renowned industry. We aspire to provide
outstanding quality materials to our clients by gratifying their expectations and maintaining their
confidence on a supreme level. Sitara textiles operate worldwide catering to the local markets as
well as serving the international markets. Sitara Hamza private Ltd. supplies to the local market
whilst Sitara textiles focuses 100% on export. We always endeavor to offer superlative quality
textiles by adopting the most innovative approaches. Sitara textiles along with its subsidiaries
outshine the entire textile industry.
Porter's Five Forces model, named after Michael E. Porter, identifies and analyzes five
competitive forces that shape every industry, and helps determine an industry's weaknesses and
strengths. These forces are:
1. Competition in the industry;
2. Potential of new entrants into the industry;
3. Power of suppliers;
4. Power of customers;
5. Threat of substitute products.
Suppliers:
 Chemicals
 Sitara chemicals
 Nimer chemicals
 Ittehad chemicals
 Sandal dyestuff

2.  Fibers yarns and threads
Types of Suppliers
 Manufacturers: Manufacturers are producers of either the entire product or components that
feed into the end product manufacturing process. If the parts supplied are generic and have easily
available alternates, the manufacturer will have less power. Conversely, if the manufacturer has
important expertise or no competing producers, they will have significant say in the value chain.
 Distributors & Wholesalers: These types of suppliers purchase products in large quantities
from different companies, store these goods and eventually sell to retailers. These products may
be made available at higher prices than if bought directly from the manufacturers, but this allows
purchases to be made in smaller quantities than a manufacturer will be willing to supply.
 Independent Suppliers/Craftspeople: These people manufacture unique items in small
quantities and provide them exclusively through representatives or trade shows.
 Importer: These suppliers will purchase from international sources and sell to local retailers.
They essentially act like domestic wholesalers/distributors for these products.

3. 1. Bargaining power of suppliers
The presence of powerful suppliers reduces the profit potential in an industry. Suppliers increase
competition within an industry by threatening to raise prices or reduce the quality of goods and
services. As a result, they reduce profitability in an industry where companies cannot recover
cost increases in their own prices.
Porter’s five forces.
The bargaining power of suppliers comprises one of the five forces that determine the intensity
of competition in an industry. The others are barriers to entry, industry rivalry, the threat of
substitutes and the bargaining power of buyers.
Power of supplier group
The following conditions indicate that a supplier group is powerful:
 It is dominated by a small number of companies and is more concentrated than the
industry to which it sells
 It is not required to contend with substitute products for sale in the industry
 The industry is not one of the supplier’s important customers
 Its products are an important part of the buyer’s business
 Its products are differentiated or there are built-up switching costs
 It poses a definite threat of forward integration
Bargaining power of suppliers depends upon many factors; there is no rule to judge low or high
bargaining power.
 If they are in concentrated numbers compared to buyers.
 If there are high switching costs associated with a move to another supplier.
 If they are able to integrate forward or begin producing the product themselves.
 If they have specific expertise or technology needed to manufacture goods.
 If their product is highly differentiated.
 If there are many buyers and none make up significant portions of sales.

4.  If there are no substitutes available.
 If there are strong end users who can exert power over the organization in favor of a supplier
(This can be the case in labor situations).
2. Bargaining Power Of Competitors:
In Textile industry there is huge competition. Sitara Textile industry’s potential rival includes
local and international businesses that are producing finished and un-finished products for both
national and international market. In international market Sitara Textile will compete with
China and India from south Asia who is producing products with large engineering scale but
Sitara Textile industry has the advantage of using Pakistani cotton, which is ranked number 1 in
international market. Other competitors include in international market from Pakistan for
Sitara Textile industry are Koh-Noor Textile, Deewan Textile and indirect competitor Pak Dyne
which only produces Demand several more, but Sitara Textile has several edge over its
competitors like
•Quality of product
•Advance technology
•Wide range of designs
Competitors of sitara textile
• M/s S.A.Samad & Company
• M/s Sahib Textile (pvt) Ltd.
• M/s Sadaqat Textile Mills (Pvt) Ltd
• M/s Samira Fabrics (pvt) Ltd.
• M/s Shaheen Dyeing

5. • M/s Sharif Textile Industries (pvt) Ltd.
• M/s Syed Dyeing
• M/s Sargodha Cloth Processing Industries (pvt) Ltd.
• M/s Saeed Fabrics (pvt) Ltd.
• M/s Shabbir Textile Dyeing
• M/s Shadman Dyeing
3. Bargaining Power Of Customers:
Local Customers
Sitara textiles never fail to achieve their customers’ satisfaction. We also make sure our
customers are 100% confident about our quality assurance. We are highly renowned on the basis
of our splendor textiles. We have customers based in Lahore, Karachi, Hyderabad, Multan,
Rawalpindi, Faisalabad, Gujranwala, Okara, Sahiwal, DG Khan, Sahiwal, Mandi Buhaddin and
Sargodha. We are among the top pioneers of textile industries in Pakistan and doubtlessly we
have gained a lot appreciation for our uphill struggle. The quality of our products has made the
bonding of Sitara textiles and our customers well-built. This always results in mutual benefits.
We never lead our customers wrong by any means and reaffirm our information that is being
shared including the product descriptions to avoid any conflicts and misunderstandings.
International Customers
Sitara textiles are not only known locally but have a high international recognition as well. We
have satisfied customers in South America, Holland, Philippine, America, France, Russia,
Denmark and Canada. Our hard slog has earned us a superior reputation and excellence in the
global textile market, which is why we stand among the top textile companies. We know our
customers expect the best out of us and we give our best shot to meet their expectations. The
years of business-bonding and enthusiastic testimonials from our valued, international customers

6. always lift our hopes of bringing innovations and introducing diversification high. We facilitate
and encourage our customers to stay in business with us by providing them a sense of
consideration. We never give them a chance of misconceive our policies as we keep it simple
and well-defined. To see the roster of our international customers.

7. 4. Threat Of New Entrance
Today we will look at how you could be affected by the threat of new entrants in your market
and how you can use barriers to entry to deter new competitors.
This applies to any business of any size but can be particularly damaging if your market is a
fixed size and suddenly you find that you have to share it with a competitor e.g. another shoe
shop opens in a small town.
The Sitara Textile also follows the rules of the model to compete with their competitors
Rising power rates and slow demand have effected operations by Sitara Chemical Industries Ltd
(SITC), the largest Chlor-Alkali producer in the country. Inability to pass on rising cost burden
to end consumers has significantly downgraded gross margins while Top-Line has remained
relatively stagnant.
Besides slow demand, the company’s main threat is deteriorating margins due to rising power
rates. To counter this, management has initiated work on a 35MW coal based power plant which
is expected to be commissioned by Jan’16. The company has already begun civil work on this

8. project and LCs has been established to acquire plant equipment such as Boiler Turbine and
Generators
Threat of New Entrants: There is increasingly larger number of competitors in the market,
which has meant a larger supply of material in the market. In the past, Sitara solved oversupply
problems by collecting and storing them to be sold when deemed appropriate by them. This
meant enormous power of the supplier over the industry. With the change in market structure and
pressure by anti-cartel laws, this power has diminished somewhat. Sitara now focuses more on
repositioning itself as the supplier of choice and not the only supplier.
5. Threat of Substitutes:
Consumers had no control over the textile industry, its pricing and supply. With an economic
downturn in the industry, there was reduction in demand, which lead to an oversupply problem
and reduced prices. To address this, major companies reduced mining operations and turned the
industry back to its higher demand lower supply model. Once again, the buyer’s power is non-
existent in industry.
Threat of Substitutes: The biggest threat to the Textile industry is from high quality high tech
synthetic cloths. These directly impact the basis of the value of the diamond, i.e. the customer
perception of its rarity and value. The price of clothes is not a true indicator of their value or
supply. But it is all in the perceptions of the consumers In addition, these are sustainable and not
the result of invasive mining activities. They are also easy to identify as not originating from a
conflicted area. All these aspect make the threat of substitutes a real one.
Competitive Rivalry: In a change from previous industry structures, the broken cartel now
means that there is some competitive pressure from the industry. There are still limited players,
but overall, the increased presence of different companies means a more company.