Porter Five Forces Analysis for Siemens AG Free Essay Example, 3250 words

It is evidently clear from the discussion that in the industrial electrical equipment industry, buyers are generally commercial users, engineering companies, and governments of different countries. Products are highly technical in nature and specialized knowledge is required in order to evaluate purchased items. Generally, buyers need to sign the contract with companies in order to purchase equipment. Bargaining power of buyer has been reduced by three factors which are, 1- an absence of electrical equipment sellers who can meet a specialized need of buyers, 2- high switching cost and 3- a need of buyers to maintain the relationship with sellers throughout the project lifecycle for implementation of technical equipment. Large electrical equipment companies buy electronic parts and raw materials from the variety of suppliers situated in different geographic locations. Due to the presence of multi-channel sourcing model and abundance of sourcing partners, companies do not rely on any particular supplier. On the other hand, many MNE electronic and engineering companies have their own production facilities to produce technical components that can be used in manufacturing complex electrical systems. Therefore, these MNE electronic and engineering companies have little dependency on suppliers. We will write a custom essay sample on Porter Five Forces Analysis for Siemens AG or any topic specifically for you Only $17.96 $11.86/page Within last 10 years, many small level companies and entrepreneurs have established the market for green technologies that can be classified as the potential substitute for electrical equipment being offered by existing companies.