You have a large sum of money to invest in an entrepreneurial venture. You are i

Question

You have a large sum of money to invest in an entrepreneurial venture. You are investigating possible alternatives on a systematic basis. Using Porter's Five Competitiveness factors, analyze and draw a conclusion about the relative attractiveness of each of the following industries:

Computer software design and manufacturing for office applications

Gasoline service stations

Franchised boutique coffee shops

Civilian aircraft design and manufacturing

Travel planning and booking (agencies)

Which one seems most attractive? Would your answer change if you represented a consortium of investors with serious funding and only two objectives: create a professionally fulfilling challenge for managers of the enterprise and a stable work environment for the employees? What do you think are the three most critical success factors for each alternative?

Explanation / Answer

Porter’s Five-Force analysis on the Computer software design and manufacturing for office applications:-

1. Threat of new entrants:-

   a. existing player can give competition by reducing their price.

   b. low cost of entry so too many competitors.

   c. saturated industry with high competition.

2. Threat of Substitutes:-

    a. software market is very versatile.

    b. too many players with unique ideas.

3. Bargaining Power of Suppliers:-

     a. it’s very low in this case as there are too many players in market.

4. Bargaining power of Buyers:-

     a. large number of players competing for same set of customers.

     b. as bargaining power is high customers get attractive offers.

5. Rivalry among Existing Players:-

     a. rivalry is very high due to large number of players.

     b. intense pricing wars.

Porter’s Five-Force analysis on the Civilian aircraft design and manufacturing:-

1. Threat of new entrants:-

   a. existing player can give competition by reducing their price.

   b. high cost of entry.

   c. saturated industry very less place for small players to enter.

2. Threat of Substitutes:-

    a. only two company are major players Boeing & Airbus so less threat.

3. Bargaining Power of Suppliers:-

     a. Airline industry in dominated by two players Boeing &Airbus.

     b. so there is less chance to gain the bargaining power because of limited number of suppliers.

4. Bargaining power of Buyers:-

     a. large number of players competing for same set of customers.

     b. as bargaining power is high customers get attractive offers.

5. Rivalry among Existing Players:-

     a. rivalry is very high due to large players.

     b. The fixed costs are extremely high in this industry. This makes it hard to enter & leave the industry.

Porter’s Five-Force analysis on the Travel planning and booking (agencies) :-

1. Threat of new entrants:-

   a. existing player can give competition by reducing their fare.

   b. low cost of entry attract too many players.

   c. saturated industry very less profit margin.

   d. presence of too many local players in every market.

2. Threat of Substitutes:-

    a. Too many alternatives in this industry.

    b. local players with attractive ideas are threat.

3. Bargaining Power of Suppliers:-

     a. bargaining power is very high for bulk bookings.

4. Bargaining power of Buyers:-

     a. large number of players competing for same set of customers.

     b. as bargaining power is high customers get attractive offers.

5. Rivalry among Existing Players:-

     a. rivalry is very high due to large number of players.

     b. intense pricing wars.

Civilian aircraft design and manufacturing seems to be most attractive to me.

1. Very few players in market so less competition.

2. With good investment we can create competition in market.

3. With better idea & technology we can make stable place in market.

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.