In the case of Reclaim Water, the Porter Cluster Model is more appropriate to use as a model in analyzing the competitive advantage of the company versus the total existence of other companies in the industry. This is brought about by the fact that the Porter Cluster model is a better measure in analyzing the major clusters involved in the water treatment industry as compared to the analyses involved in the Porter’s Five Analysis. For instance, the Porter’s Five involves that there should be the existence of the bargaining power of the suppliers such as the manufacturers as well as the assemblers of the water treatment as well as the consumers or end-users of the Water. Porter’s Five could be used in determining the degree of competition in the water treatment industry. The industry has a promising future which is classified into three: chemicals, equipment, and services. In total, it accounts for $6.2 Billion in the global market.
However, based on the case of the water treatment industry, which according to the article by Walsh, is considered as an emerging industry expected to grow over the next decade. This supports the argument that the industry is indeed a good market to enter as current players such as Monsanto, Vivendi, etc. This can be explained by the increase in public concern over the safety of water in the target market thereby increasing the willingness to pay of the consumers for treated water. Since, there is a considerable amount of industry growth; entry barriers to the industry would be rather beneficial to the existing players in the industry such as Reclaim Water. This phenomenon can be explained better through the Cluster Analysis because the model would group the players in the industry through their supply chain classification. For instance, the industry suppliers are divided into chemicals, water-treatment equipment, and services providers. On the other hand, the consumers are divided according to need either for drinking water treatment or waste water treatment. So basically, the dilemmas that could arise if Porter Five Analysis is used could be reprimanded by the principles of Cluster analysis such as the Agglomerative hierarchical analysis.
Furthermore, favourable entry of other players in the industry can also be magnified through the Product Life Cycle. The Cluster analysis is best applied to the industry which is on the growth stage, such as the case of the water treatment industry. This is supported by the fact that the water treatment industry introduces new technologies especially for waste water treatment and clean water conversion which could improve industry outputs. Whereas on the other hand, the Porter’s Five Analysis is better used in an industry that is already on the maturity and would soon begin to decline in importance.
References:
PORTER, R. C. (2002) The economics of waste. xii, 301 p.
PORTER, M. E. (1998) On competition. vi, 485 p.
PORTER-ROTH, B. (1998) Proposal development : how to respond & win the bid. PSI successful business library., 1 v. (various pagings).
WALSH K. & SCHMITT, B. (1999). Water Treatment – Customer consolidation makes waves. Chemical Week.
