Porter’s Five Forces Analysis of Cement Industry 

Cement is a hardening chemical used in construction along with combining water and sand. Building and construction works often employ cement as the main hardening material and element. Today, we’ll discuss Porter’s five forces analysis of Cement industry; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in the strategic management cement industry Porter’s analysis.

Porter’s five forces analysis of Cement industry would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Cement industry Porter’s five forces analysis of cement construction material business as follows; cement industry Porter’s analysis;

Porter’s Five Forces Analysis of Cement Industry

Let’s discuss Porter’s five forces analysis of Cement Industry as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in Cement Industry

The bargaining of suppliers is lower in the Cement Industry as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the Cement Industry Porter’s 5 forces analysis of cement construction material business are as follows;

I-Easy Raw Material Availability

Chalk, clay, silica sand, and limestone are easily available natural resources found in various parts of the world. The cost of raw materials is very low to none; the cost and expense cement companies incur is the transportation and carriage cost. However, easy availability of raw materials and supplies decreases the bargaining power of suppliers.

II-No Differentiation

Clay, silica sand, limestone, shale, and chalk are a type of raw materials and supplies that have the same chemical properties and characteristics across the globe. The refining process in the production of cement would remove all the small issues and problems.

Bargaining Power of Buyers in Cement Industry

The bargaining of Buyers is higher and lower depending on the client’s order in the Cement business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the Cement Industry Porter’s 5 forces analysis of cement construction material business are as follows; cement industry Porter’s analysis;

I-Construction Companies

There are multiple companies producing and manufacturing cement in the Cement Industry. Construction companies are top users of cement and they place orders of mega volume. In fact, they directly buy it from the cement manufacturers to remove all the middle parties. The mega scale of their operations and massive orders amplify the bargaining power of construction companies.

II-Individual Customers

The scale and size of cement orders of individual customers is very low and they have to buy it from the local cement suppliers or the supermarket. The small size of individual customer order decreases the bargaining power of ordinary customers.

Threat of New Entrants in Cement Industry

The threat of new entrants is low in cement construction material business as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the Cements Industry Porter’s five forces analysis of cements construction material business are as follows;

I-Heavy Equipment Cost

The initial cost of building the cement production and manufacturing plant is very high. In fact, it requires heavy capital investment for the land, building, machinery, equipment, workers, storage facility, supply chain, logistics, and distribution network. When you add up all of these costs and expenses, then it becomes hundreds of thousands and millions of dollars.

II-License & Government Approval

Along with heavy capital investment, Cement Company needs government approval to start its production and manufacturing operations. In fact, different countries have set a limit to it; no other company enters into it in their presence. With the growing environmentally sustainable trends, getting approval from the government would be even more difficult.

III-Established Brand Image

The cement companies operating their business in the Cement Industry; have established a strong brand image with years of marketing and quality service. It is highly difficult for newcomers to enter and win the market share all at once.

Threat of Substitutes to Cement Industry

The threat of substitute products and brands is higher in the Cement industry as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the cements Porter’s five forces analysis of cements construction material business are as follows; cements industry Porter’s analysis;

I-Multiple Alternative

As mentioned earlier, there are multiple companies offering the same quality cement at almost the same price. Individual customers and constructions could easily switch from one cement brand to another without incurring any cost. It makes the substitution rate much higher, and they need to invest a significant amount of capital resources to maintain the high-quality cement.

Competitive Rivalry in Cement Industry

The competitive rivalry among Cement companies is moderate in the Cement industry as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in the Cement Industry Porters forces analysis of cements construction material business are as follows;

I-Monopoles Cement Market  

There are a limited number of manufacturers and producers in the cement industry and they offer cement packets at the same rate without any difference. Customers have to choose either this or that; with no a lot of alternatives. Collectively, they all increase the price of cement and the customers have to pay for it; that’s what makes Cement Industry’s market monopoles.

Conclusion: Cement Industry Porter’s Five Forces Analysis |5 Forces Analysis of Cement Industry |Cement Porter’s Analysis 

After an in-depth study of the Porter’s five forces analysis of Cement Industry; we have realized that Cement Industry Porter’s analysis is highly significant for clear understanding. If you are learning about the Cement industry 5 forces analysis of cement construction material business; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; the threat of new entrants and substitutes of cement industry Porter’s analysis; and intense rivalry as competitive forces in strategic management.