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Top Glove's Porter Five Forces Analysis In 19?9, Michael E

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Top Glove's Porter Five Forces Analysis In 19?9, Michael E. Porter has proposed the idea of Porter's Five Forces Model that allow the company to assess and evaluate the competitive strength and position of business organization (Scott, 2021]]. Porter's Five Forces Analysis suggest the business should look beyond the actions of its competitors and focus on those factors that might impact its environment. Those factors had been categorized into five categories of forces under Porter's Five Forces Model, which known as threats of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute product and rivalry among existing firms (Martin, 2019}. The industry attractiveness are discussed below with respect to Top Glove Corporation Berhad and medical glove market by using Porter's Five Forces Analysis. 1. Threat of New.r Entrants: The threat of new entrants for Top Glove Corporation is consider as low. According to New Straits Time [2020], worldwide demand for surgical gloves is booming due to the pandemic of Covid—lEI'. M any companies wish to enter medical gloves marketwith the desire to gain market share. However, it is not easy for those newly formed company to join this market due to high entry barriers. One major sources of high entry barriers is economies of scale. The Top Glove [2020] has claimed that their business has contributed 26% of the world market share for rubber gloves and possess 45 factories, T24 production lines and a production capacity of 35.5 billion pieces of gloves per annum. Hence, Top Glove could enjoy cost advantages associated with large—scale operation, new entrants might not enjoy the cost benefits as what Top Glove enjoy and suffer cost disadvantages and decline its profitability eventually. Second major source of high entry barriers is contributed by high capital requirement. According to Belle [2020}, single—use gloves require significant capital investment as it require a minimum 152 million investment to increase one new production line. New entrants have to invest heavily in their technologies and equipment to enter medical gloves market. Furthermore, the technology is evolving rapidly nowadays. This will lead to the rise of cost disadvantages for new entrants as they are unable to produce goods at the same or lower price as Top Glove Corporation Eerhad. In short1 threats of new entrant for Top Glove Corporation Berhad has low intensity.