Michael Porter identified some five forces that should be analyzed and they are enlisted as follows (Porter, 1980)
In terms of competition, Sanyo will have to deal with international companies such as LG and Samsung in order to create value for their money. Most of the problems arise out of the fact that these companies have experience in selecting washing machines. Additionally, some of them also have innovative ideas. In order to counter the effects of these companies, it will be essential for Sanyo to boost their marketing strategies. (Porter, 1980)Additionally, the company will have to employ some of the innovative ideas that have previously worked in other parts of the world. On top of this, it will be essential for the company to understand that customer service is an imperative part of dealing with competition. They need to train their employees to handle these consumers. (Brandenburger and Nalebuff, 1995)
Industries that are susceptible to threat of new entries are those ones that operate in environments that require minimal investments in capital and low cost of leaving the market. However, because the electronics industry requires heavy investment in capital and also because costs of exiting the industry are rather high (manufacturing equipment is sold for much less value than it was bought) then this is not a very big problem for the Aqua machine. (Porter, 1979) Besides that, the company is also not likely to meet increased competition from other entrants because they have the benefit of larger economies of scale which they have established over the years. This will allow them to save and the savings can then be transferred to the consumer who can pay less for his products.
Sanyo does face a threat of supplier power owing to the fact that the Aqua machine is manufactured outside the Nigerian market. Consequently, the company does not have a chance of monitoring the Nigerian environment more closely. Additionally, this company is also faced with a threat because of the fact that it does not have closer association with the Nigerian environment. It will need to form a branch in Nigeria so as to adequately monitor their selling environment. This can be particularly difficult if the company is trying to do this while still being located in other parts of the world. (McGahan, 2004)
Buyer power may not necessarily be a threat to the Aqua washing machine launch owing to the fact that there are few products within the Nigerian market that offer the value that Sanyo product does. Additionally, buyer power would be high if there are no obligations made by consumers during the purchasing process. Sanyo can create this scenario by introducing contracts during the process of selling. (Kotler & Keller, 2004)
The issue of buyer power will not be a particularly disturbing one to Aqua because of the fact that its target market segment i.e. the middle class and affluent have not been heavily penetrated by other companies. LG and Samsung can only boast of a very small percentage of its market share and this will go a long way in enhancing the overall potential within the