
Order custom Harvard Business Case Study Analysis & Solution. Starting just $19
Porter Five Forces Analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry. Tiptree Inc. managers can use Porter Five Forces to understand how the five competitive forces influence profitability and develop a strategy for enhancing Tiptree Inc. competitive advantage and long term profitability in Life Insurance industry.
Tiptree Inc. is one of the leading firms in the Life Insurance. Over the years Tiptree Inc. has redefined the ways of doing business in Financial. Tiptree Inc. is listed at New York Stock Exchange (NYSE) and have a market cap 211.61M USD.
In his revolutionary article - "Five Forces that Shape Strategy", Michael Porter observed five forces that have significant impact on a firm's profitability in its industry. These five forces analysis today in business world is also known as -Porter Five Forces Analysis. The Porter Five (5) Forces are -
Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Porter Five Forces focuses on - how Tiptree Inc. can build a sustainable competitive advantage in Life Insurance industry. Managers at Tiptree Inc. can not only use Porter Five Forces to develop a strategic position with in Life Insurance industry but also can explore profitable opportunities in whole Financial sector.
New entrants in Life Insurance brings innovation, new ways of doing things and put pressure on Tiptree Inc. through lower pricing strategy, reducing costs, and providing new value propositions to the customers. Tiptree Inc. has to manage all these challenges and build effective barriers to safeguard its competitive edge.
All most all the companies in the Life Insurance industry buy their raw material from numerous suppliers. Suppliers in dominant position can decrease the margins Tiptree Inc. can earn in the market. Powerful suppliers in Financial sector use their negotiating power to extract higher prices from the firms in Life Insurance field. The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Life Insurance.
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 Tiptree Inc. profitability in the long run. The smaller and more powerful the customer base is of Tiptree Inc. the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.
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.
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. Tiptree Inc. operates in a very competitive Life Insurance industry. This competition does take toll on the overall long term profitability of the organization.
By analyzing all the five competitive forces Tiptree Inc. strategists can gain a complete picture of what impacts the profitability of the organization in Life Insurance industry. 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 Tiptree Inc. 's managers can shape those forces in their favor.