Altair Porter’s 5 Five Forces (2021)

Altair Company Overview:

Altair is a company that currently specializes in the manufacturing of computer software and specializes in simulation. They have recently acquired Advantage, Inc., which also specializes in simulation. Even though they are currently struggling with their debt Altair has proven to be very successful and still continues to stay competitive each year. The main five forces considered for this paper will be the competitive rivalry, bargaining power of suppliers, bargaining power of buyers, the threat of new entrants, and finally the threat of substitutes. Altair was founded in 1975 and headquartered in Troy, Michigan. Altair is currently operating as a subsidiary to Vector Capital after it merged with “The Carlyle Group” which acquired the company for $4.3 billion dollars back in 1996. The first five years were very successful and they were even recognized as New Product of the Year Award from Computer Design magazine two years in a row. Since the acquisition of Advantage, Inc. there have been some changes to Altair’s strategy. We are now going over Porter’s Five Forces Model of Altair.



Altair Competitive Rivalry:


Altair competes with many other companies in the same industry. They compete against companies such as Dassault Systemes, ANSYS, PTC, and Bentley Systems. However, their main competitors are “TechniGraphics Incorporated” and “Autodesk“. TechniGraphics specializes in software for product design and manufacturing while Autodesk specializes in 3-D modeling software. Altair has many ways to advance its advantage over the competition including using simulation to increase efficiency, lower costs, and analyze product performance. Most of these suppliers are trying to outpower each other by offering better services that keep customers loyal to them instead of switching companies.



Altair Bargaining Power of Suppliers:



Altair is faced with many problems with their suppliers. They are always struggling with finding new ones to keep up with what they need. At one point in time, Altair had over 1000 suppliers but now only has around 200 which means they have high bargaining power. One of the main reasons why it is hard for them to find new suppliers is because they are not big enough to supply them with what they need or the supplier doesn’t have the ability to produce what they want. When suppliers do have what Altair needs, it’s usually at a high price which can be very expensive for Altair.



Altair Bargaining Power of Buyers:



Altair has a low bargaining power compared to the consumers. They are always trying to find ways to get their products and services noticed which is why they do whatever it takes. If they were able to lower prices just a little bit, then more customers would be drawn into buying their product or service. Altair also tries to target specific types of clients that usually need what they are selling. That way they are able to get specific information about their clients which will keep them sticking with Altair.



Altair Threat of New Entrants:


Altair’s current position in the industry makes it difficult for new competitors to enter because there is no room for another company to offer similar services. The reason why new companies cannot easily enter the industry is because of the high start-up costs and it can be hard to make profits right away.


Altair Threat of Substitutes:


The main threat Altair has is from “Autodesk” because their products are very similar which makes it easy for customers to switch over to Autodesk instead of Altair if they have a product that is better. However, Altair does have an advantage because they give their customers more options. They are able to create and edit 3-D models which take Autodesk a few steps behind them since it’s not possible with their system.


Altair Porters Five Forces Conclusion:


Altair Simulation is currently in a good position in the industry. They have been able to stay on top of their competition and keep up with all of the changes that are going on around them. Altair has taken advantage of how unique and new simulation really is so they have been able to start many different types of campaigns and programs. Through doing this they have been able to start a lot of new relationships that will help continue their success. Altair has a high bargaining power because it is one of the only companies that specialize in simulation. Because of this, Altair can charge high prices for what they are selling and customers will still buy from them even if another company is offering something similar. They have a low threat of new entrants because they have been able to stay ahead of the competition. If someone were to try and start their own company that focused on simulation then it would be very difficult for them because Altair knows what they are doing. They are set in their ways which makes it hard for another company to come in and make the necessary changes to make simulation easier.

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