Threat from Substitute Products Rivalry among the existing players.
Threat from Substitute Products Rivalry among the existing players. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition.
Valero Energy Corporation has to manage all these challenges and build effective barriers to safeguard its competitive edge. By building economies of scale so that it can lower the fixed cost per unit.
Building capacities and spending money on research and development. New entrants are less likely to enter a dynamic industry where the established players such as Valero Energy Corporation keep defining the standards regularly.
It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry. Suppliers in dominant position can decrease the margins Valero Energy Corporation can earn in the market. By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another.
Developing dedicated suppliers whose business depends upon the firm. One of the lessons Valero Energy Corporation can learn from Wal-Mart and Nike is how these companies developed third party manufacturers whose business solely depends on them thus creating a scenario where these third party manufacturers have significantly less bargaining power compare to Wal-Mart and Nike.
Bargaining Power of Buyers Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible. This put pressure on Valero Energy Corporation profitability in the long run. The smaller and more powerful the customer base is of Valero Energy Corporation the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.
This will be helpful in two ways. It will reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production process.
By rapidly innovating new products. Customers often seek discounts and offerings on established products so if Valero Energy Corporation keep on coming up with new products then it can limit the bargaining power of buyers. New products will also reduce the defection of existing customers of Valero Energy Corporation to its competitors.
Threats of Substitute Products or Services When a new product or service meets a similar customer needs in different ways, industry profitability suffers.
For example services like Dropbox and Google Drive are substitute to storage hardware drives. The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry.
By understanding the core need of the customer rather than what the customer is buying. By increasing the switching cost for the customers.
Rivalry among the Existing Competitors If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry.
This competition does take toll on the overall long term profitability of the organization. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity. By understanding the Porter Five Forces in great detail Valero Energy Corporation 's managers can shape those forces in their favor.Petroleum Refining Overview Size of U.S.
industry Major refiners Petroleum products Basic petroleum economics Trends for crude oil & gasoline prices When do refiners make money? Wilmington, CA Huntway 5, Valero 6, Simple.
Valero is the world's largest independent petroleum refiner, and a leading marketer, ethanol producer and corporate citizen. Industry Analysis. Free Trial; Search Companies | Industries | Contacts.
Search the D&B Hoovers Database. Valero Energy was not only named after a mission (the Mission San Antonio de Valero), it is on a mission to be the largest independent refiner in the US. Valero has exited the retail business in order to focus on its oil refining Location: 1 VALERO WAY, SAN ANTONIO, , TX.
Valero Energy Corporation Porter Five (5) Forces Analysis for Basic Materials Industry Threats of New Entrants New entrants in Oil & Gas Refining & Marketing brings innovation, new ways of doing things and put pressure on Valero Energy Corporation through lower pricing strategy, reducing costs, and providing new value propositions to the customers.
Latest Breaking news and Headlines on Valero Energy Corporation (VLO) stock from Seeking Alpha. Read the news as it happens! Valero, headquartered in San Antonio, Texas, is an independent domestic refining company. Valero is engaged in national refining, transportation, and marketing of petroleum products and related petrochemical products.
Valero reported net income of .