Its Millian and not billion.

In June call they were talking about this subsidiary being for EV/BMS etc…Some quick turnaround of thought process and execution !! Maybe the biggies like Kayanes, Tata’s should learn from them.

Michael Porter’s Five Forces framework is one of the most widely regarded business strategy tools. It was designed by Michael Porter in 1979, and it’s relevance exits till date. This model helps you analysis the weaknesses and strengths of various Industries and serve as a tool to pick the right companies while choosing to invest in stocks.

■ Industry Rivalry
■ Power of Buyers
■ Power of Suppliers
■ Threat of Substitute
■ Barriers to Entry

● Industry Rivalry: The competitive Rivalry of any industry depends on how profitable or Competitive the industry is

1. What is the current size of the industry?
2. At what pace is the industry growing?
3. How many competitors are there in the market?
4. What is the competitive landscape in terms of company size?
5. Are there any potential mergers or acquisitions between direct competitors?
6. What is the level of marketing effort behind these products?

● Barriers to Entry: It refers to the potential for new competitors to enter the market and threaten the existing businesses. When a market becomes overcrowded, competition intensifies, and profits decline. To maintain their market share, existing players often try to create barriers to entry.

1. What is the brand equity or brand recognition of the existing brands?
2. What are the barriers to entry related to economies of scale in this market?
3. What are the costs of exiting the business?
4. What is the number of products in this market segment?
5. Are there significant government regulations or legal barriers, like trademarks or copyrights, that could hinder entry into this business? If not, we might expect to see more new players.
6. The amount of capital needed to enter an industry can serve as a barrier to entry. A lower capital requirement can reduce this barrier and encourage new competition.

● Power of Buyers: Customers have greater bargaining power when there are fewer of them and more sellers to choose from. Additionally, if a significant portion of a seller’s revenue depends on a small number of buyers, those buyers will have more leverage.

1. Consumers are very sensitive to price changes in this market
2. The volume of raw materials purchased is very high.”
3. The number of buyers is limited
4. There is a wide range of suppliers to choose from
5. Switching Costs
6. Numbers of customers

● Power of Suppliers: When suppliers have strong bargaining power, they can sell resources at higher prices than expected or even supply lower-quality materials. The Numbers of Suppliers, their resources, and the Uniqueness of their products can significantly impact a company’s Competitive position.

1. What is the number of suppliers in the market?
2. What is the typical quantity of each supply purchased per order in this industry?
3. What is the cost of the most readily available alternative products or services?
4. Suppliers with the ability to enter their buyers’ industry have a significant advantage. Their existing access to necessary supplies makes it difficult for their former customers to compete if they decide to enter the market themselves.

● Threat of Substitute: When buyers have the option to switch to similar products or services at a comparable cost, the threat of substitutes becomes significant.

1. How many substitutes exist in the market?
2. What is the cost for buyers to switch to a substitute? Is it low or high?
3. How comparable are their functionalities?
4. What is the relative performance of other alternatives compared to the chosen product?

□ Advantages Of Michael Porter’s Five Forces Model:

1. Holistic Analysis: By analyzing Porter’s Five Forces, organizations can make informed decisions about resource allocation and competitive strategy.
2. Comprehensive Overview: It offers a comprehensive analysis of an industry, identifying key factors that can affect a company’s market position.
3. Industry Analysis: By using this framework, organizations can gain insights into the competitive dynamics of an industry and identify potential areas for growth or risk.
4. Strategic Decision Making: By analyzing competitive forces, organizations can make informed choices about resource allocation, market entry, pricing, and competitive positioning.
5. Benchmarking: The framework can be used to evaluate the relative competitive intensity of different industries and assess their attractiveness as a place to do business.
   6.Managing risk: By anticipating potential threats, companies can take steps to mitigate risks and maintain their relevance to consumers.
6. Identifying potential areas for growth: By recognizing unmet needs and industry gaps, businesses can create unique value propositions or develop innovative solutions.

□ Disadvantages of Michael Porter’s Five Forces Model:

1. Static Nature: A key criticism of Porter’s Five Forces is its static nature. It doesn’t fully account for the rapid changes and disruptions that can occur in today’s dynamic industries.
2. Overemphasis on Competition: While competition is important, other factors such as technological advancements, regulatory changes, and consumer preferences can also significantly impact industry dynamics.
3. BackWard – Looking: The model’s backward-looking nature makes it more suitable for short-term predictions. This limitation is exacerbated by the rapid pace of globalization and technological advancements.
4. Difficulty in Quantifying Forces: It can be challenging to accurately measure and quantify the relative strength of each of the five forces.
5. Limited Focus: The framework primarily focuses on the five forces and may neglect other crucial elements such as regulatory changes, technological advancements, and macroeconomic trends.
6. Specific to the industry: The framework is designed for industry analysis and may not be suitable for evaluating individual companies, especially those operating in multiple industries.

□ The essential takeaways from Porter’s Five Forces analysis:

● The framework is designed for industry analysis and may not be suitable for evaluating individual companies, especially those operating in multiple industries.
● While Porter’s Five Forces is a valuable tool, it has limitations. To get a more complete picture, consider using other analytical tools like SWOT analysis and Value Chain Analysis(By analyzing their value chain, companies can identify the activities where they can create the most value and gain a competitive advantage)

Thank you!

Hi @yrm91

Your points are valid and factual.
What do you think is the reason for relatively lower PE multiple for Star Health as compared to the Life Insurance companies. Are we all missing something here? The stock has stayed in the same vicinity forever.

Disc; Invested