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Porter’s 5 forces Vietnam’s real estate industry. Porter’s 5 forces Vietnam’s real estate industry. Porter’s 5 forces Vietnam’s real estate industry. Porter’s 5 forces Vietnam’s real estate industry. Porter’s 5 forces Vietnam’s real estate industry. Porter’s 5 forces Vietnam’s real estate industry. Porter’s 5 forces Vietnam’s real estate industry
Porter’s forces: Vietnam’s real estate industry Student Institution Professor Date Introduction The real estate market in Vietnam has been described by analysts as a promising frontier of investment The demographic trends such as the expanding middle class have been identified as key drivers of this positive outlook This paper will be analyzing the real estate industry in Vietnam using Porter’s forces at a time Porter’s forces of competitive advantage is a model which uses factors identified by Michael Porter, the famous management scholar, to analyze the structure and thus attractiveness of a given industry (Porter, How competitive forces shape strategy, 1979) Companies usually use this model to determine their corporate strategy Competition in the industry There exists many Vietnamese and multinational players in the real estate industry in Vietnam The players in this market are adopting aggressive measures to gain a competitive edge against each other These measures include leveraging technology to facilitate buying homes, selling them, renting them out and experiencing living in Vietnam A single industry player is thus weak in this regard First, the model seeks to find out how many competitors exist in the market and how the competitive atmosphere is (Porter, 1985) If there is a large number of players in the market selling similar products or services, then it can be expected that the power of the company will be less Potential of new entrants into the industry Entering the Vietnamese real estate industry requires a lot of capital and expertise white take time and effort to acquire (Nguyen, 2019) These factors make it difficult for a new entrant to thrive in the market When it is easy for a new entrant to begin operations, the power of the company is less since new entrants may eat up the company’s market share A company operating in the Vietnamese real estate industry may therefore be considered as being powerful in this regard Power of suppliers The raw materials used in the real estate industry are numerous (Huy & Nhan, 2020) These include the varying construction materials all sourced from various suppliers Inputs such as cement, wood, tools machinery etc are all supplied by different parties The large number of suppliers results in a low bargaining power for them and higher power for a real estate company operating in Vietnam This force examines how powerful the suppliers of the company are To determine this, the analyst establishes the number of suppliers that exist If there are few suppliers in the market then it can be implied that suppliers have a lot of power in that market and the company has low power Bargaining power of customers Potential real estate customers in Vietnam are many, especially with the ballooning middle class Every household is a potential customer Though there are many real estate developers in Vietnam, the potential customers greatly outnumber them This implies that customers have a low bargaining power to drive the prices in the market Prices of property in Vietnam depend on the location with some regions being more expensive than others Threat of substitutes There aren’t many substitutes to real estate Most people in Vietnam would prefer to leave in a home as opposed to the streets This implies that the threat of substitutes in the Vietnamese real estate market is low In this regard, a real estate company in Vietnam can be said to be at an advantage A real estate company being analyzed would therefore be regarded to have high power based on this force This force analyzes how easy it is for customers to switch up to an alternative product or service that is different from what the company is offering (Porter, 1985) If customers can easily switch to a substitute, then the company can be said to have low power The customers will have more power since the company will be forced to grant their wishes so as to keep them from shifting to a substitute Conclusion Porters forces model used herein is a useful tool for determine the competitive market structure of an industry The outcome is indicative of how powerful a player is in the market The threat of substitutes, bargaining power of customers, power of suppliers and potential of suppliers suggest that player in the real estate market in Vietnam has power This implies that Vietnam is an attractive market for a prospective real estate developer with enough capital and experience References Huy, D T., & Nhan, V K (2020) Impacts of Internal and External Macroeconomic Factors on Firm Stock Price in an Expansion Econometric model—A Case in Vietnam Real Estate Industry Data Science for Finianial Eonometrics, 189-205 Nguyen, M.-L (2019) Relationships between Real Estate Markets and Economic Growth in Vietnam The Journal of Asian Finance, Economics and Business, 121-128 Porter, M (1979) How competitive forces shape strategy Havard Business Review, 85 Porter, M (1985) Competitive Advantage: Creating and Sustaining Superior Performance New York: Simon snd Schuster ... Econometric model—A Case in Vietnam Real Estate Industry Data Science for Finianial Eonometrics, 18 9-205 Nguyen, M.-L (2 019 ) Relationships between Real Estate Markets and Economic Growth in Vietnam... of suppliers suggest that player in the real estate market in Vietnam has power This implies that Vietnam is an attractive market for a prospective real estate developer with enough capital and... substitutes to real estate Most people in Vietnam would prefer to leave in a home as opposed to the streets This implies that the threat of substitutes in the Vietnamese real estate market is low