Threat from Substitute Products Rivalry among the existing players. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition.
There is less chance of this happening if there are at least some form of barriers to entry into the industry such as strict regulations, need for specialized knowledge or high investment requirements.
Conversely, there is less chance of new companies entering the market if there is significant profit potential and not many obstacles in the way to achieving this profit.
According to his modelthis threat changes the competitive environment and directly impacts the profitability of an existing firm.
If there is a higher threat of new entrants, this means that there are low barriers to entry and there is high possibility that the industry profit potential will decrease as a whole.
This is because more competitors will fight for the same amount of business. Sales and market shares will be redistributed and there may be an effect on price and product quality. Means of Entry into a Market How a new firm enters a market can happen in a number of ways: A company from outside the industry may take-over an existing firm, thereby avoiding any of the traditional barriers to entry within the firm.
This firm may bring new and innovative expertise to the industry, thus changing the competitive dynamics for everyone.
Product diversification from existing firms into other categories. Foreign based competition, through development of a specific competitive advantage can also be a threat. Increased demand may result in increased prices thereby allowing a new entrant to make use of this increase and offset any high costs of market entry.
Existing firms may choose to control how a new firm enters the market rather than attempt to stop any new competitors from emerging.
Most of these can be categorized within the potential barriers to entry that exist for that industry. These barriers may make it easy or difficult for a business to enter into the market and establish their presence.
Barriers may exist in some industries or in some markets but not in others. There is also a chance that they exist but are not enforced strictly.
There are many types of barriers to entry including those created by the government, by the existing companies, by the nature of the business and by the existing industry structure.
Some of these include: When manufacturing or selling at a large scale, companies are able to avail cost advantages because per unit costs of the product fall.
So the more the company produces in quantity the more the benefit. When existing companies have this advantage, it can act as a barrier to entry because a new entrant will have to try to match the scale to achieve the same cost advantage as the existing company.
This may not be possible at the initial stage. If the product being sold by the existing company or companies is highly differentiated or enjoys strong brand loyalty, then this can act as a strong barrier to entry.
The new entrant will have to invest in creating a product with newer and unique features and benefits that surpass those offered by the old company. In addition, there will need to be strong efforts to break existing brand loyalties and shift them to a new untested company.Cruise News.
The inside news of the Cruise Industry. Cruise Industry News Quarterly Magazine, Annual Report and Executive Guide. The cruise industry, which modern version dates from the s with the development of the North American industry, has experienced an increasing process of popularization, becoming a major part of the tourism sector, and reaching a level of enormous significance world-wide as an economic factor.
Laggard in cruise industry in despite industry-leading top line and bottom line growth. Nearly 50% growth in berths planned for Cheap relative valuation to peers based on price-to.
New entrants to the cruise industry are rare, and it’s because there are big barriers to entry. However, there have been several new entrants in the past two decades — namely Oceania, Viking. Some of the plans would be: the creation of new tourism plans that include new routes, publicity which will boost the cruise line and create an innovative and attractive image to prospective clients.
To attract more passengers, cruise operators continue to expand their routes and offering new services. The threat of new entrants is low for the cruise industry. With vast economies of scale enjoyed by the three incumbents, new players would find it hard to be price competitive.