Allianz is one of the leading multinational financial services providing company in Germany headquartered in Munich. The core businesses of Allianz are asset management and insurance. Its main objective is to accompany its customers in life and providing everything they need to be courage forward. It offers its 92 million consumers services in over 70 countries a broad range of services, products, and insurance solutions (Allianz, 2019).
Porter five forces analysis is a strategic management tool used to determine the present competition level in the industry. It has five main forces, threats from the new entrants and substitute products, bargaining power from buyers and suppliers, and rivalry from existing players in the industry. Here is the detailed analysis of Allianz;
Bargaining Power of Buyers
There are limited firms producing the product and buyers have very limited choice in deciding form where to make the purchase. This clearly means that buyers do not have much control over the prices and thus their bargaining power is weak. Moreover, the differentiation of the product in the industry is very high, and buyers find it difficult to get alternatives for the specific products. Thus, the switching is difficult. Consumers income within an industry is quite low, which puts the pressure on the Allianz to keep the reasonable prices. Allianz mostly focuses on the differentiation and innovation for attracting more consumers. The quality and product differentiation attract the large pool of consumers. It is also focusing on building large consumer base to weaken the bargaining power (Murphy, 2018).
Bargaining Power of Suppliers
Suppliers in the industry are more than the consumers actually Allianz is dealing with. This clearly means that suppliers do not have much control over the prices and thus they have weak bargaining force. This is also possible because of the standardized products suppliers are offering and hence, Allianz have to bear low switching cost to other one. Moreover, suppliers usually do not provide the credible threat for the forward integration, which makes their bargaining power weaker. Allianz is the important consumer for its suppliers and the profit level is closely tied with the suppliers. thus, it is necessary to have the reasonable pricing. Allianz purchases the raw materials form the suppliers at minimum cost. It has different suppliers for different locations, and has efficient supply chain network (Fern fort, 2019).
Threats of New Entrants
Threats from the new entrants are low in case of Allianz technology plc because of the difficulties in achieving the economies of scales in industry, which will help in gaining the cost advantage. This makes the production costly for new entrants. Moreover, before entering in the industry, it is necessary to have the product differentiation so that consumers will be attracted to the product rather than the old ones. The need of the capital is much, which is difficult for new entrants as starting up the business. The rules and regulations from the government are strict and abiding back from them is a big no for the new entrants. Allianz technology focuses on the innovation and keep differentiating its services and products to be in the market and attract the consumers (Murphy, 2018).
Threats from the Substitute Products
There are not many substitutes available in the market for the products produces by the Allianz. Many of the substitutes are produced by low profit industries. It means, no such ceiling is required on maximum profit earning in industry, and hence making the threats from the substitute products a weaker force. Quality matters the most while finding the substitute for the products. A good quality product is way more expensive. This makes the buyers to not to switch to other products. Allianz focuses on producing good quality products at very reasonable prices. It also differentiates its products with the competitors (Blueocean, 2019).
Rivalry of Existing Players
There are many rivals in the industry of Allianz like AXA, MetLife, AIG, etc. who are large in size and has the market share of the industry. The companies are always engaged in making competitive strategies and take actions to gain the limelight of the industry. Allianz has to focus more on retaining consumers and meanwhile also attract new consumers, in order to increase the customer base. It focuses more on market research products and analyse the situation of supply and demand (Murphy, 2018).
References
Allianz, 2019. Who we are? [Online], Available at: https://www.allianz.com/en/about-us/who-we-are.html, [Accessed on: 6th May, 2019].
Blue ocean, 2019. Allianz Porter Five (5) Forces Analysis. [Online], Available at: http://blueoceanuniversity.com/frontpage/portercoanalysis/17594-allianz, [Accessed on: 6th May, 2019].
Fernfort university, 2019. Allianz Technology Trust Plc Porter Five Forces Analysis. [Online], Available at: http://fernfortuniversity.com/term-papers/porter5/lse/568-allianz-technology-trust-plc.php, [Accessed on: 6th May, 2019).
Murphy, E. 2018. Allianz Porter Five Forces Analysis. [Online], Available at: https://www.essay48.com/term-paper/13636-Allianz-Porter-Five-Forces, [Accessed on: 6th May, 2019].