Weak A good initial attempt. However these are things you need to consider: "Customers" are not necessarily JUST real estate agents, especially if the realty office is as small and locally-focused as VanRealty is. Customers could also be future homeowners or those looking to sell their homes. As such, you have failed to place the Porters 5 forces of "Buyers" into the VanRealty context. Please re-read the company description. However, good job on your explanation of WHY real estate agents in general are important in the real estate business. This would've been a good answer had VanReality been a much larger, regionally dominant reality company.
Strongest Force: Buyers, The "customers" for a real estate firm are actually the real estate agents; they're the ones who pay to register with a company. Real estate companies earn all revenue from what real estate agents pay to hang their licenses so they can sell., Real estate agents have a large selection of firms they can choose to register with, so it's important for real estate companies to offer competitive pricing and services to attract real estate agents.
Good - Nice work outlining each one and ranking them all. Which one is the most important? Also, elaborate on what you meant by "point of differentiation, price/service". When thinking about the P5, think about how your company fits in with it. Are you competing against national firms or the smaller local firms? Residential or Commercial? Keep this in mind moving forward. Overall good stuff. -Rupin
Rivalry, Important: There are a large number of competitors within the industry who can easily compete with MoveIT. Due to the fact that there are few characteristics which can differentiate moving companies from each other, there is a large degree of rivalry as they compete for business., Point of differentiation, price/service., Little long-term relationship with costumers due to the nature of moving, which requires more marketing and interaction with potential costumers.
Substitutes, Not as important: though there are substitutes in the form of U-Haul or the simplicity of moving it yourself, there is still a need of having assistance with larger objects that cannot be as easily replaced by other services.
Potential Entrants, Not as important: there is a relatively high cost for entrance since a company would need to buy heavy moving trucks, which would result in a high initial cost for the company.
Supplier, Not as important: due to the small number of suppliers, initial purchase of trucks and the fuel and people, there is relatively low supplier power
Buyer, Not as Important: Though there are quite a few moving companies, the costs are relatively fixed and the services is essential for those who require a moving truck so they have little overall buyer power.
Good - Nice work. You bring up some good points in rivalry. There are switching costs (trailer fees) but as you said, those are minimal. Now its time to take it a step further: how will rivalry change how VanRealty operates? Will it target a specific market, change its value proposition, or try cost leadership? Also, do you consider substitutes important? As a real estate services firm, be sure to look at the bigger picture. Also be wary that you not only help sell property but also help buy property. Overall good work! -Rupin
most important: Rivalry, While supply and demand determine if the market is hot or not, what determines if VanRealty gets business depends on its competition. The various commission levels that each company charge determine to a great extent if VanRealty will be chosen., There are numerous real estate agents and companies in the city that offer higher or lower commission rates, which can affect the choices of the buyers. However, company reputation and quality of service relative to that of its competitors can also affect the choices of its consumers., It is difficult to differentiate VanRealty service as it takes a long time to build a customer base and a beneficial 'reputation' of the company, There are low switching costs to change realty services. The thing that is lost is the relationship built but less financial ties.
other important forces, Buyers, House price is determined by the number of buyers, Potential Entrants, It is relatively easy for new companies to enter the market.
Good - I like how you're to the point. Nice work. When reading the nodes on suppliers, it seems like you're jumping from point to point, which makes it a little hard to follow. Also, how will you have "good relations" with the suppliers, and what will make them give you a better price than Whole Foods, which is much bigger? As you've outlined, there are a smaller number of suppliers, which gives them much higher power during price negotiations. Other than that, you guys have a good grasp of things. Great start! -Rupin
Suppliers, Good relations with suppliers allows for agreements on lower prices., COMPETITIVE ADVANTAGE, !, In times of short supply (due to unforeseen forces of nature) suppliers will not hike up prices., We provide them with timely delivery and sales of their product., There are a smaller number of suppliers for this type of product., Turnover rate for this product is very high., Not very high profit margin on organic foods, money must be used efficiently in supply chain., Source: "Retailers are only earning 7.4% of the profit margin on organic applies - compare that to 75.3% profit margin for conventional apples.", !
Weak Nice start. Potential entrants is a very important force. Let's take it a step further now: how does the prospect of new entrants into the industry affect how MoveIT operates? Be sure to keep in mind the other forces as we move forward and develop the value proposition in Phase 2. -Rupin
Potential Entrants, Few barriers to entry in industry - leading to high level of rivalry, Low starting costs and not many employees needed to operate, There are no regulations (only drivers license is required), Being the first moving company in the industry does not provide an advantage, therefore making it appealing to entrants
Adequate I like the variegated analysis you have done regarding the realty industry of Vancouver. However, you have failed in this analysis to CLEARLY justify/outline WHY exactly rivalry is the most important Porters 5 Forces? Merely saying that the real estate market is "saturated with numerous firms of all sizes" is not enough. Please elaborate.
Real Estate market is saturated with numerous firms of all sizes. Tough to establish point of difference. Business is stolen from competition., the need to raid other firms
point of difference: customer service, increase switching costs for new clients, reduce our firm's fixed costs, sales people who work on the road in general, e-commerce, search function more readily available compared to other firms (ReMax, Multiple Listings, Century), build on brand integrity, the people's choice, counteracts the low barriers to entry
The Vancouver housing market is diverse in characteristcs, Geographical: Regions, communities, cities, neighborhoods, Shaughnessy vs Dowtown Eastside, Type of Housings: Condo, Apartments, townhouses, duplex, etc..., supply is medium-low because infrastructure is quick to increase, Utilize different property characteristics: Commercial, residential, industrial, establish client memberships for specific properties (early viewings, discounts, build points)
may seek to build a company to merge or be sold in the future to capture larger market, drive out other firms
Weak+ A good initial attempt. However, if stating that Workforce's clients can find temporary workers through other avenues such as Workopolis, Craiglist etc. then the accompanying Porters 5 forces for this would be "Rivalry" and NOT "Threat of Substitutes" as you have indicated. This is because Workopolis is a market competitor for City Workforce. This site has the capability to source temp ( and permanent) workers for clients through its online job listing portal. Refer to class notes for what difference is between "Threat of Substitutes" and "Rivalry."
Most important force: Substitutes, Substitutes seem to provide the largest threat to City Workforce. Since the company is essentially a temp agency, their clients—other companies—can also find temporary workers through other websites such as Workopolis, Monster.ca, Craigslist, and other job banks and job search sites where they can post their temporary job requirements., A possible shortfall of online job sites: a Temp agency like City Workforce would be better because they can verify the quality of their workers, whereas random job postings online would be more difficult and time consuming for companies needing to simply find a quick temporary worker to fill an immediate need., A possible advantage of online job sites: potential employee communication with companies would be more direct, and thus this could possibly reduce transaction costs.
Adequate +/Good - Good justification as to why you've selected "Threat of Substitutes" as the most important Porters 5 forces. Could have taken justification a little further by stating/explaining why GoodFoods prices may be "slightly higher than other big box stores." ( i.e. could have referred to differences in distribution channels & chains etc.) Also, I like the comprehensive analysis you have done with regards to the other porters 5 forces and how in doing so you have supported your answer of "Substitutes" being the most important porters 5 forces.
Most important force = Substitutes, Why the other forces are not as important, Potential Entrants: - we are an established chain of stores - for new firms to enter the market, it will take time for them to develop their reputation, Suppliers: - no monopoly in suppliers industry - they have to compete within themselves (close to perfect competition - suppliers depend on our company as a customer to keep their own business running as well, Buyers: - people to go to organic stores will be more loyal to go to store, willing pay higher price for health benefits - since they are willing to pay, price will not be as easily driven down, Rivalry: - there is significant competition, however other retailers may not have the same connections with suppliers or as many therefore we may have an advantage in capability of providing the most diverse range of organic goods as compared to limited selection at superstore, costco, Substitutes are most important because: - revenue depends on customers - many other big box retailers such as superstore, costco that customers can switch to -we only have organic foods, customers may choose to buy non-organic - established retailers switching to organic section customers may choose to get all their needs in one place -our price may be slightly higher than other big box stores, customers may not be aware of the value of higher quality goods at our store
Adequate - A good initial attempt.However, rationale not entirely sound when stating why "Threat of Substitutes" is the most important Porters 5 Forces. Stating that "patients WILL NOT BE willing to pay more" for a service otherwise provided free by the government is not sound, as Datamed's differention strategy is that of customer-focus. In having this business strategy, Datamed seeks to induce a just noticeable difference in medical services and compel customers to pay for medical services. Also, failed to justify why other Porters 5 Forces are important. For example, merely stating " hard to drive prices down" is not enough. Need to say WHY this is the case.
Weak Failed to adequately justify selection of Buyers being the most important Porters 5 forces. Merely saying that "buyers control the prices" is not enough. If trying to make a valid argument about Buyer's being the most important Porters 5 Forces, then you should discuss how buyers may be concentrated in the area in which VanReality operates and as such they have power over a considerable amount of market share. A more elaborated upon and rationale justification should also have been given to "Sellers" and "Potential Entrants"
Most important Force: Buyer - Buyers control the prices, the real estate market depends on the speculation of buyers
Adequate + A good initial attempt.I like that in determining which Porters 5 forces is the most important that you have analyzed the other forces and justified why they are not as important. Good insight and rationale as to why "Buying Power" is the most important force. However, you could have elaborated more on why there is little "product differentiation." This seems counter intuitive considering City Workforce is all about securing the "right" temp workers for its clients.
Strongest Force: Buyer Power, Reasons: - The entirely company is hinged on the employers who “buy” labour. They can demand lower fees and City Workforce will not have anyone else to turn to. - Little Product Differentiation: They have many other options so do not need to stay with City Workforce. - Jobs are almost always in demand but in limited supply
Other Lesser Forces, All other forces are tough as this market is somewhat crowded with the number of job-search websites available (substitutes, rivalry). Moreover, companies have their own job recruitment departments, use newspapers, online listings, etc. to find qualified applicants. Supplier power is, however, extremely low as people in need to jobs are in a very poor position to actually make demands on prospective employers or the job search programs available to them.
Adequate +/Good- Good start! Which of the two Porters 5 forces is the MOST important? It is a little unclear given that the justifications you have provided for both Porters are so inter-related. I did like the justifications you have provided but would however have liked if you had elaborated a bit more on your rationale for the "Threat of Substitutes" Porters 5 forces more.
Substitutes, High, - people can substitute away from organic produce, to regular produce (higher prices may encourage this) - people can choose to buy from a variety of other marketplaces e.g bigger chain stores or Farmer's markets (lack of product differentiation makes for low switching costs)
Buyers, Medium/high, -can choose to bring their business elsewhere (e.g Farmer's market--> supports local community at the same time) -can always go to larger chain supermarkets' (e.g Superstore) organic produce section where prices are usually known to be lower
Adequate -/Weak ++ Good identification of a porters 5 forces. However lacked adequate justification for this selection. Why is Rivalry the most important? Also which industry exactly are you doing a porters 5 forces analysis on? The financial industry? There are many subsections in the vast financial sector, and so perhaps in this case it would be best to select small-to-midsize investment firms as your base industry to conduct a porters analysis on. In future make it clear which industry you are analyzing and why.
Rivilary, There are many other large financial firms in the market with big client base and a reputation. Creating a trust-worthy investment company is crucial in increasing competitiveness
Adequate - Nice job outlining the 3 forces. All are very important. Which one is the most important? I'm not sure I understand your comments on potential entrants. How is it easy for a company to build a nation-wide network of offices, gain a reputation of successful hires, and be profitable? Also, what is meant by "lacks a strong value proposition"? In the future, let's try going into more detail as to what you are trying to say. -Rupin
Substitutes, Companies can find individual contractors and hire temporary workers directly. They can also find employees via websites such as Workopolis and Monster.
Buyers, City Workforce relies on companies to hire the temporary workers that City Workforce has in its data base. Because this is City Workforce's only revenue stream, the buyers (companies) have a lot of power over City Workforce.
Potential Entrants, Easy for other companies to set up similar systems to attract potential employees. This company lacks a strong value proposition
Weak + Nice start. I'm a little confused, because in your description it sounds like you're talking about rivalry. Is that what you meant? If you meant buyers and not rivalry, then try to be more clear as to who you define as the buyers and specifically how they have high power. Nice start! -Rupin
Buyers: High, As well-established firms have a large client base existing, individuals are not likely to invest their wealth in a relatively unknown firm. Furthermore, as wealth management is a relatively archaic industry, growth occurs slowly, increasing the amount of rivalry within the industry., The High Net worth Individuals have numerous choices for wealth management companies. For instance, there are Morgan Stanley Wealth Management Group and Goldman Sachs Wealth Management Group. The customers for wealth management industry will consider the larger companies to be more credible to let their money to be handled.
Adequate + Nice how you guys are already looking for a target market. Good start. In this phase however, we're looking directly at the five forces. Since you've chosen rivalry, what we're trying to see is how rivalry affects how DataMed does business. Its good how you've identified private clinics, but now let's take it a step further. Overall, nice start. -Rupin
Rivalry, High: Main rivals include private clinics and publicly funded health care institutions and initiatives that provide the same services - patients will not be willing to pay more for the same services. Those who have dire need of the services provided, are seeking services not provided by other institutions or those who have the disposable income to pay for superior customer service will make up our customer base and allow our business to be profitable. Other possible patients include tourists and people with a student or work visa who are not permanent residents or citizens who would have to pay for publicly funded services regardless. If we do not achieve the desired value proposition for our customer base by providing superior and/or exclusive services, reducing waiting times, etc., potential and/or existing patients will prefer services provided by our rivals.
Good - Good job outlining rivalry. Its in depth and accurate. The only thing is to be careful about when differentiating between substitutes and rivals. For example, do you consider UHAUL a rival or substitute? If you are following a service-oriented value proposition, then they are a substitute, and not a rival. Other than that, it looks pretty good. We could go more in depth on the other ones as well, because they are quite important. -Rupin
Important: Rivalry, There are many other competitors in the moving industry that are larger and have greater market share than MoveIT. (e.g. U-Haul), Other companies have better brand recognition and are larger than MoveIt., Larger companies can get lower input prices because they purchase greater quantities (e.g. gas, trucks) --> provide lower prices for customers (wider margins), Other companies have better IT systems compared to MoveIT's paper-based one
Not as important: Buyer, Buyers can't bargain because there is a set price for the services.
Not as important: Supplier, The supplies for MoveIT are: trucks, gas, and labour. The supplier for these inputs don't have much power to change prices as gas is controlled by OPEC, trucks by an automotive retailer, and labour is not specialized and determined by contract.
Not as important: Substitutes, Substitutes pose a threat if the potential client has friends/family that could help them instead.
Not as important: Potential Entrants, It is difficult/expensive to enter the market without proper infrastructure (i.e. gas, moving trucks)
Adequate + Nice work talking about the P5. You've stated quite a bit to show your understanding, and you answered the question specifically. Be sure to exhaust each of the P5 and go into as much depth as possible. As an example, when talking about substitutes, also think about government agencies (like Service Canada) that help out with employment. Be careful when talking about the recession. Check current stats to see how the economy is doing before making assumptions and statements. -Rupin
Buyer Power, Buyer power (employers) is high because the industry is in a recession right now and employees (the suppliers) are willing to provide labour for a lower price than they would've during inflationary periods. The employees are contingent, meaning that they lack the formal training that most companies provide, essentially, these employers are choosing employees from a pool on undifferentiated (due to lack of training) labour.
Supplier Power, Without suppliers (employees), there would be no business for City Workforce. Buyer power is around low to medium due to the fact that the market is in a recession, meaning that the suppliers are desperate for jobs to provide to the buyers. Also, the the supply of labour is provided by each individual employee, this lowers supplier power. Due to the fact that the contingent employees are unskilled and undifferentiated, thus further lowering supplier power. There aren't many switching costs between contingent employees because they normally move between many industries quite often and this prevents employees from retaining the skills that would be switching costs to corporations. However, supplier power does receive a boon due to the fact that the geography of City Workforce and the employees in that region are giving city workforce the labour.
Substitutes, The substitutes in this case would be websites like monster.com and workapolis. Substitutes in this case would be low-medium because in the recession, the potential employees would be looking for any advantage they could receive in finding a job. The employees could answer job postings for work but there is a higher probability of getting a job when City Workforce is directly contacting the employers to establish work relations.
Potential Entrants, While starting a company that focuses on establishing connections between employees and employers wouldn't be high, the credibility of a established company that can ensure with a greater percentage that an employee can find out job would prevent many new companies from starting up a new business, due to the lack of their credibility.
Rivalries, There aren't many companies in the region that perform a similar task, at least to our group's knowledge
Adequate + Nice job identifying substitutes. Try going a bit more in depth into your explanation. Also, it is a good idea to go into a bit of depth on the other forces, so you can be more confident with your choice of the most important. How are substitutes correlated to how your business operates? Also, be wary to differentiate between rivals and substitutes! All in all good work. -Rupin
Substitutes, -High degree of substitutes, because low product differentiation can affect greatly on the other forces. If there is a high degree of substitutes then customers can easily choose to consume alternative products (lower price products), causing substantial impact on Good Food's sales., High degree of substitute will also increase buyers power; therefore, it is easier for buyers to switch to other retailers i.e. marketplaces, superstores, grocery store. Our group thinks that degree of substitute of an industry defines how the company operates, because fundamentally, if there is a high degree of substitute it means that there are many competitors in the market and in this case it includes big retail stores such as Safeway and Save on food. Ultimately, we believe that degree of substitutes can greatly affect all of the other forces indirectly, and that the higher the degree of substitute is, the greater the impact on the other forces there will be.
Adequate-/AdequateA good start. However, please justify the statements you have provided under "Rivalry." WHY would you consider the industry to be fragmented? Why would you consider there to be "diversity rivals?" Where did you get your statistic from that this services is NOT frequent ( once in 5 years)? Remember to justify and be able to defend any claims you make, no matter how obvious you think it is. Only in doing so will your argument of Rivalry being the most important Porters 5 Force be sound.
1. Rivalry (The most important 5 Porter's Forces) - Many competitors are in the same industry --> - Difficult to be unique - It is a fragmented industry - No switching cost; customers can easily change to other companies [or rent your own truck and DIY] - Diversity rivals - Some moving companies also offer other services such as storage systems, shipping from overseas - Hard to secure loyal customers because this kind of service is used not as frequent (i.e. once in 5 years) - Company is in a niche market (within Vancouver)
2. Threat of new entrants - Moderate to low start up cost (capital) - Easy access to inputs - Low proprietary learning cost - Low brand identity in the industry