Poste Italiane S.P.A otherwise known as Italian Post is an Italian postal service provider that provides postal service and provides integrated communication, postal saving products, logistics, financial, and insurance services throughout Italy. Within the postal and logistics industry, the organization was founded in 1862, and the location of headquarter is based in Rome, Italy.
As of 2019, the conceivable revenue of the organization of 11,038 billion euros, and their number of employees have estimated at around 130,000 (Poste Italiane, 2019). From the observation of the postal and logistical industry, Porter’s five forces evaluation would allow maintaining future strategies to understand the organization’s condition in a better way.
Competitive Rivalry in The Market
Competitive rivalries in the postal and logistic industry are high, as other well-known companies provide better and economical postal and logistic service. Therefore, some companies in the industry have a contribution to the market shares. The rivals’ prices are also competing, and the costs of switching among the big names are also minimal.
The major competitors of the firm are UniCredit, Intesa Sanpaolo, UBIBanca and TNT. Post-Italiane is trying to give a tough competition by showing a revenue figure of around 12 billion Euros. At the same time, other firms have revenue of 21.1, 25.3, 2.6, and 8.3 billion Euros in the market (Owler, 2020). Leading to strong competition amongst firms in the industry. The competition level is therefore high in the postal and logistics sector.
Threat of Substitutes
There is a low threat of replacement in the postal and logistic industry due to having fewer alternative options. The main threat that can be seen as a concern is the air delivery service, which many organizations can offer. The threat of substitutes is based upon the quality of service the organization provides in order to ensure the company’s reputation, such as online or electronic service or marketing strategy that keeps the brand name and service (Parcu et al., 2018). When a value proposition distinguishes itself from present industry alternatives, the threat of replacing service is low. Hence, there is a very low danger to substitute of posts and logistics.
The Threat of New Entrants
The threat of new entrants in the postal and logistics industry is considered to be low because of the barriers to entry maintained by the firms already operating in the market. In the aspect of international companies, they have sources of distribution channels and networks that have a much larger scale of equipment such as transportation for local and international shipments. Therefore, it would be considered difficult for new entrants to compete with the global giant.
Furthermore, the capital requirement is another hurdle in the way for new firms to establish effective and efficient networks across the country or even at the international level. However, new entrants can compete with the local postal and logistics industry. The regulations provided by the government are also another barrier for new entrants (Zhu, 2019). Hence, the threat of new entrants is low.
Bargaining Power of Buyers
The Bargaining power of customers in the case of the postal and logistics industry is high as many other companies provide services, for example, e-commerce businesses to which they can switch to easily. This can lead the service to remove its uniqueness and the difference it offers. There is also a greater deal of switching into different companies due to low-cost strategy, thus making it easier for consumers to switch to a more plausible service (Laari, Toyli, and Ojala, 2018) to prevent or urge their consumers to lower rates since their business earnings may effect. Therefore, with this strategy in mind, the ability of customers to negotiate is strong in the case of the postal industry.
Bargaining Power of Suppliers
The bargaining power in postal and logistic services to negotiate is low. This is mostly due to products and services are mostly similar and basic materials for postal services are easily available in the market. In addition, easy backward integration availability also plays a role in reducing suppliers’ negotiating strength.
As a result, providers are more than purchasers. However, due to specialization, aircraft, automobiles, and ship suppliers enjoy moderate bargaining power. The organization’s solid relationship with suppliers hence needs to be highly profitable. (Aloui et al., 2021). Therefore, the negotiating leverage of suppliers is low in the context of the postal and logistics industry.
References
Aloui, A., Hamani, N., Derrouiche, R. and Delahoche, L., 2021. Assessing the benefits of horizontal collaboration using an integrated planning model for two-echelon energy efficiency-oriented logistics networks design. International Journal of Systems Science: Operations & Logistics, pp.1-22.
Laari, S., Töyli, J. and Ojala, L., 2018. The effect of a competitive strategy and green supply chain management on the financial and environmental performance of logistics service providers. Business Strategy and the Environment, 27(7), pp.872-883.
Owler, 2020. Competitors. [online] www.owler.com. Available at: https://www.owler.com/company/poste#competitors.
Parcu, P.L. and Comandini, V.V., 2018. On some historical contributions of the postal and delivery conference. In The Contribution of the Postal and Delivery Sector (pp. 13-29). Springer, Cham.
Posteitaliane, 2019. Financial performance. [online] Posteitaliane.it. Available at: https://www.posteitaliane.it/en/financial-performance.html.
Zhu, J., 2019. Research on Modern Logistics Legislation: An Economic Law Perspective.