Introduction and overview
Television industry in the last ten years has witnessed tremendous changes in its competitive intensity. The players in the industry have deployed numerous incentives in order to capture the customers; it includes free gifts, exchange schemes, deferred payment schemes, prizes, as well as prize off. These incentives therefore, have made the television industry vibrant and competitive. Some of the players in the TV industry include Philips, Sony, Sharp, Panasonic, Samsung, Sansui, and Akai.
Television industry analysis-Porter’s Five Forces
Porter’s Five Forces, realistically, assesses the potentiality of opportunity, risk based, and profitability within an industry on five key factors. Certainly, the model works best in developing a strategic advantage over firms which compete within the industry, in this case Television industry. The five forces are competitive rivalry, potential entrance, threat of substitutes, power of suppliers, as well as power of buyers. The collective strength of these five forces determines the key profit potential in the television industry.
Competitive rivalry refers to the struggle between different players in the television industry in order to gain market share. The force is located at the centre of the model. There has been a lot of competition rivalry in the television industry. As a matter of fact, there are many players in the market who are remarkably close in the market size. For example, Samsung and Sony don’t have clear cut dominance in the industry in terms of market leader. The issue of counterfeit productions has reduced differentiation among television players. As a matter of fact, main competitors employ similar strategies increasing competition. This force depends on exit barriers, strategic objective, and degree of differentiation, cost structure, and competition structure.
New entrants of television players raise the degree of competition, hence reducing the attractiveness. This force depends on the barriers to entry. Barriers to entry in the television industry do exist. These include economies to scale, brand identity, pricing, licensing costs and high capital costs.
Another force in the model is a threat to substitute. Television industry has a substantial number of players; therefore, substitutes exist, lowering industry profitability and attractiveness. The threats in the industry concerning the presence of substitutes include willingness of buyers to substitute, cost of substituting, performance of substitutes, and the price of substitutes.
Bargaining power of suppliers is also noteworthy. All players in the television industry have their supplier of labor, energy, raw materials, certification, and equipment. The cost of items that the suppliers bring affects the company’s profitability. For example, if the bargaining power of suppliers is high it reduces the attractiveness of the company. This force varies in each player in the television industry.
Finally, bargaining power of the buyers determines the demand in the industry. Perhaps, with increase of dominant players in the television industry, buyers continue to increase its bargaining power. The bargaining power of consumer differs among television players this is because of buyer information, brand identity, price sensitivity, standardization, and dominance of the industry players.