Threat Of Buyer Industry Rivalry In The Harvard Business Review

Porter’s Five Forces Industry Analysis In order to analyze competition within an industry, Michael Porter from the Harvard Business Review developed Porter’s Five Forces, which allows companies to get a feel into the potential industry profitability by looking at the pressure of the competition. Once when a company gets a clue on their competitors, they come up with a way to further themselves to make that profit. This analysis has five key components that make it up which are Supplier Power, Buyer Power, Threat of New Entry, Threat of Substitution, and Industry Rivalry. Industry Rivalry There is a higher degree of competitive rivalry among wholesale clubs, mainly because they are four powerful competitors in the market share. The limited …show more content…
The main factors in this decision are based on there being little to no entry restriction, new products people want to buy, and there is no need for high assets. There are two external factors that come with the threat of new entrants, they are low switching costs and start-up/expansion. Low switching cost means that it is easy for a consumer to switch from one wholesale to another. Wholesales give the opportunity for its consumers to transfer from one store to another. Start-up/expansion is when a new company joins in the industry or a company that wants to expand their industry. Wholesale clubs cannot claim an area and start their business running there are some regulations that they have to do before the place can open. There is the start-up cost for starting a business and they need to get inventory help be successful in the long run. With all of these factors combined together, they all equal to a moderate force for the threat of new …show more content…
With the proper technology that we have now, consumers can easily access information about prices and offers among their competitors. This results in making it easier for them to transfer to the places that has the best offers. Each club offers a very similar selection of products and services, consumers have the opportunity to command low prices because they have the power to switch to another club once when the membership expires. Jamie Cattanach posted on the internet the cost for membership at wholesale clubs. She says, “Costco fee’s $55, BJ’s $50, and Sam’s Club is $45” (Cattanach, 2016). The US is the leading wholesale companies having numerous locations ranging from the big cities to the suburbs. This is why I gave wholesale club a strong force for this