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<p align="justify">ABB is a Swiss-Swedish multinational corporation based in Zurich, Switzerland. It was founded in 1988 by the merger of Brown, Boveri &; Cie (BBC) and Allmänna Svenska Elektriska Aktiebolaget (ASEA) and now operates in over 100 countries in the world (ABB, 2020). ABB is specialized in robotics, power, heavy electrical equipment, and automation technology areas. It is been enlisted in SIX Swiss Exchange, New York Stock Exchange and Nasdaq Stockholm (ABB, 2020). It is well known for its industrial robots and electrification products. The electrification products such as electric vehicle infrastructure, solar inverter, and modular substation. Its power grid division provides components for transmission and distribution, Porter’s five forces model is a useful tool to identify threats and opportunities faced by ABB in the electrical industry in the world</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The electrical industry is saturated overall. ABB has edge over its rival due to its diversified divisions and products. It electrification, robotics and power grid division provides it benefit in market. It is considered as one of the biggest robot makers in the world. It two major rivals are French based Schneider Electric and Irish based EATON. The annual revenue of Schneider Electric and EATON was $30,353.90M (Fortune, 2019) and $21,390M (EATON, 2020) respectively. ABB posted the profit of $2,173.00M with the overall revenue of $37,360.00M (Fortune, 500). ABB holds major market share in robots and electrical equipment. The steady growth in the industry, the larger market share provides them the edge against its rival. The out of the industry competition is low. The competition within the industry at the moment is moderate due to the growth in business opportunities.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitution is low, it is because of the two main reasons. The industry scale ABB operates is concentrated and there are very few alternative products available at the moment. The industrial revolution after the dawn of 21st century is driven by the technology. The technology had evolved industrial supply chain. Robots are taking places of human. In last decade the cost of robotics have decreased as compared to labor cost (Mckinsey, 2017). ABB is a part of world top 5 robots maker. It is the front runner in innovation and technological revolution in this century. It provides it a secure financial future. ABB needs to keep evolving its products with innovation to keep its market share. The overall threat of substitutes is low against ABB.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">The electrical market is saturated and there is always threat of new entrance. The demand in electric equipment is increasing day by day. It provides a perfect window for startups. The entrance barrier protect the market leader. The higher capital investment in technology is the major entry barrier. The cost to develop new products for the market can stand out the startup. To innovate a new product, high capital is required to work research and development purpose. ABB operates 7 research centers with 8000 technologist all over the world. It spend around $1.5B on research and development of product (ABB, 2020). These research centers help them in developing new products and it keeps them ahead of market rival. The market leader will retaliate against any startup for their share. Startup needs higher capital investment to stay and compete in the market. The threat of new entrant is moderate.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The buyers of the electronics equipment produced by ABB are usually companies who install them and industries who uses their technology for the production purposes. Majority of time equipment are directly purchase by the authorities or states. They look for long term contracts and quality products. They don’t hold any major power due to differentiation in product available in market. ABB has large client base, and deals with the economy of large scale. The Bargaining Power of Buyer is high if the buyers are large, they are ably to switch easily to another supplier who maybe are in numbers (Slater &; Olson, 2002). The product they produce are high end product and it’s difficult to find a better alternative from the market. The buyer can’t switch to other companies for products, which is another reason for weaker negotiating power. The overall buying power of client is lower in that case.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">The supplier in the industry is the one who provides the raw materials, distributor of product and labor force the ABB. The industry is dependent on the raw materials. The key pieces are produce by the ABB in-house department. The raw material suppliers can exert it powers. ABB holds the power due to availability of multiple suppliers. The higher switching cost and time required to switch to a newer supplier can derail its production rate. It can result in loss in business. The labor force can’t exert power, higher executive can get better deals because they lead the company. Overall the supplier’s power is moderate in that case.</p>
<h2 align="justify">References</h2>
<p align="left">ABB. (2020) History. Available at: https://new.abb.com/about/history<br />
ABB. (2020) Investor and shareholder resources. Available at: https://new.abb.com/investorrelations/investor-and-shareholder-resources/share-price-monitor#<br />
ABB. (2020) Research and Development. Available at: https://new.abb.com/careers/opportunities/where-do-i-fit-in/r-d<br />
Eaton. (2020) History. Eaton complete annual report 2019 at: https://www.eaton.com/content/dam/eaton/company/investor-relations/eaton-complete-annual-report-2019.pdf<br />
Fortune. (2019) Global 500. Available at: https://fortune.com/global500/2019/schneider-electric/<br />
Fortune. (2019) Global 500. Available at: https://fortune.com/global500/2019/abb/<br />
Mckinsey. (2017) Automation, robotics, and the factory of the future. Available at: https://www.mckinsey.com/business-functions/operations/our-insights/automation-robotics-and-the-factory-of-the-future<br />
Slater, Stanley &; Olson, Eric. (2002). A fresh look at industry and market analysis. Business Horizons. 45. 15-22. 10.1016/S0007-6813(02)80005-2.</p>
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