10th, March, 2010.1.a). Porter’s Five ForcesThe ForcesImpact (+/-)Potential (H/M/L)Supplier PowerThe industry has very strong supplier powerThere are very many construction companies (over 10,000) (Construction Center, 2010). +HBuyer PowerThe industry has very many people still in need of houses due to construction of few houses in relation to the number of people in need (Shelter, 2010). +MCompetitive RivalryThere is no competition (Social Housing is provided by the government and housing associations and does not aim at making profits. It aims at providing affordable housing to those in need+LThreat of New EntrantsThere is no threat of new entrants (Social housing provided by the government)+LThreat of SubstitutionNo threat of substitution (There are no substitutes for houses)+LThere are two analytical models that can be used to analyse an industry or a business.
These are; the Porter’s five forces and the PESTEL analysis. Porter’s five forces analysis establishes how strong an industry or a business is considering the situation that the industry or the business is, for example the competitive position of an industry or a business. In this case, the industry to be analysed is the social housing industry and the situation is that of sustainable development.
The question is; is the industry in a strong position to achieve sustainable development or in what position is this industry considering sustainable development? According to the Housing Corporation, sustainable development is that development that seeks to provide a balance between the environmental resource protection, social progress, stability and economic growth (2003). For a housing industry to ensure sustainable development, it has to ensure it provides high quality and well managed houses, provide good condition houses that does not affect the health, employment, self esteem and education of the people that live in it, make use of layout and designs, location and planning that supports sustainable development, make use of policies that support sustainable development for example reducing social exclusion and must select development sites that encourage environmental conservation (Housing Corporation, 2003). The Supplier power: If the industry has very few suppliers to choose from, then the suppliers will be more powerful than the company.
The social housing industry in UK depends on building contractors for construction of buildings. There are very many building construction companies in the UK.
According to a construction’s centre website, there are more than 10,000 housing construction companies (Construction Centre, 2010). The companies provide building system, external walls, fire protection, bathrooms, ceilings, drainage, doors, stairs and so many other construction services. With a variety of companies to choose from, the social industry has more power that the suppliers. Additionally, these companies show some characteristics of sustainable development. The companies are categorised into, building system, external walls, lighting, roofs, renewable energy, fire protection, bathrooms, ceilings, drainage, doors, stairs constructors and several others which is a clear indication of specialization and efficiency.
Buyer Power; The buyer controls the prices if they are few, if they prefer other products or services apart from the company’s and if they do not have the cash to purchase a company’s products and so on. The buyer determines the position of the company. If there are many buyers willing to buy a company’s products, then the company’s profits will be high and its position will be enhanced (Porter, 2008). The social housing industry in UK has so many buyers.
In providing sustainable development, the needs of the people in need of the houses have to be determined. Currently, the number of houses provided by the social housing system is not enough for the number of people in need of houses for example in England (Shelter, 2010). Competitive rivalry: The government and the non-profit organizations are the only organizations that provide affordable housing to those in need. It would have competition from the private rented sector in terms of achieving sustainable development, but in this case, there is no competition in providing housing facilities to the people in need.
The private rented sector companies compete among themselves for people in need of houses and can afford but not for provision of social houses (Porter, 2008 social housing pdf).